Head of research for Rakuten Trade, Kenny Yee has advised investors to practise caution and prudence when investing and trading glove stocks amidst a recent rally, following renewed interest among the public in such stocks. This came as Malaysia’s Covid-19 infections surpassed 20,000 cases last week.

Investors have been picking up glove stocks at a bargain, which subsequently led to a gain of over 18% for Top Glove Corp Bhd, the world’s largest glove maker, in just a week. Hartalega Holdings also saw its share price climb up to RM2.75 – the highest in 17 months – whereas Kossan Rubber Industries Bhd’s shares rose to a 21-month high of RM1.88.

The rally in glove stocks also lifted Bursa Malaysia’s overall trading volume on 18 December to RM3.02 billion, with 4.81 billion shares.

This positive sentiment for glove stocks came despite the fact that many of these companies are still not profiting, and are in fact facing fierce competition from glove makers abroad – such as in China and Thailand. There is also an oversupply of gloves globally, which has resulted in intense pressure on the average selling price of the item.

“The sudden interest in glove stocks is the result of several factors, which include the spike in Covid-19 cases. In addition, the sector also witnessed a turnaround in the third-quarter results season, where some players also saw narrowing losses,” said Yee, who further explained that this latest round of glove stock surge is essentially a form of rotational play. He also said that investors may consider glove stocks for trading purposes, but urged them to be careful in doing so.

To note, Malaysia had experienced a round of glove stock “mania” back in 2020, which was triggered by the onset of the Covid-19 pandemic within the country. During this period, the shares of some glove makers had even surged more than 1,000% at one point, but the rally eventually lost steam in 2021 following the distribution of vaccines.

(Source: The Star)

• TAGS:
• Bursa Malaysia
• Covid-19
• Glove Stocks
• Hartalega Holdings Bhd
• Kenny Yee
• Kossan Rubber Industries Bhd
• Rakuten Trade
• Shares
• Stock Market
• Stocks
• Top Glove Corp Bhd