Analysts Urge Investors To Stay Vigilant Amidst Glove Stock Rally

Alex Cheong Pui Yin

16th May 2024 - 3 min read

glove manufacturers — (Image: The Edge Markets)

Analysts from Rakuten Trade have urged investors to remain cautious in their trading, following a surge in the active trading of glove stocks listed on Bursa Malaysia yesterday.

“Trading on rubber glove stocks took the limelight yesterday buoyed by the US tariff imposition on Chinese goods, which will only take effect in two years. Therefore, we see yesterday’s euphoria as only a knee-jerk reaction and advocate investors to be vigilant,” the online equities broker noted in its daily market report for today.

For context, shares of Malaysian glove manufacturers surged yesterday due to the US government’s move in announcing a slew of major tariff hikes on various Chinese imports, including medical and surgical gloves. As such, tariffs on rubber medical and surgical gloves are set to jump from 7.5% to 25% in 2026. This, in turn, is expected to give US buyers reason to shift to Malaysian gloves as a cheaper option, giving Malaysian glove players the chance to regain market share following the price competition with Chinese glove manufacturers that has been ongoing since 2021.

The surge yesterday saw Top Glove Corporation becoming the most actively traded stock on Bursa Malaysia for the day, with trading volume hitting an eight-month high of 506.89 million shares. It also hit limit up, closing 31.25% higher at RM1.26 – the highest it has been since June 2022. Aside from Top Glove, other local glovemakers – including Hartalega Holdings, Supermax Corp, and Kossan Rubber Industries – also experienced a jump in their share prices, putting them at a two-year high.

Aside from Rakuten Trade, Hong Leong Investment Bank (HLIB) Research also noted that the newly announced US tariff hikes will not have a material incremental effect to its forecast for 2026. That said, it does believe that China’s glove manufacturers’ decision to gradually shift their target markets from the US to European and Asian markets will result in a near-term trade diversion from the US to Malaysia.

“This will benefit most Malaysian players, albeit biased towards Hartalega and Kossan,” the research house noted.

The president of the Malaysian Rubber Glove Manufacturers Association, Oon Kim Hung also chimed in on the matter to say that while this latest update may eventually bring positive impact for local industry players, there should not be much immediate impact. This is because the hike will only take effect in 2026.

“About 35% of our rubber glove exports are to the US market, contributing about RM4 billion in 2023. However, we should not forget that the US also has its own domestic production. We believe that Malaysian producers should continue to invest in ESG matters, and the way forward is to establish sustainable and equitable prices,” Oon further stressed.

(Sources: The Edge Markets, New Straits Times)

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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