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Glove counters end volatile week up on Friday

SHARES of glove makers closed mainly lower this week, with their exuberance tempered by worries over detention orders in the US over at Top Glove, and amid intriguing "trading patterns" for such counters. 

UG Healthcare closed off this week with a loss of 16.8 per cent; Riverstone shed 1.5 per cent, while Top Glove bucked the trend with a 9.3 per cent gain. 

The counters were up on Friday, amid a muted session of trading on the Singapore bourse. UG Healthcare closed at S$1.64, rising S$0.32 or 24.2 per cent; Riverstone ended at S$3.21, up S$0.21 or 7 per cent, while Top Glove finished at S$7.52, gaining S$1.03 or 15.9 per cent. 

Top Glove on Thursday disclosed that the US Customs and Border Protection (CBP) had placed a detention order on disposable gloves manufactured by two of the company's subsidiaries. Such a move had been aimed at stopping imports from companies suspected of using forced labour, Reuters reported on Thursday. 

Top Glove said it is reaching out to the CBP through its office in the US, as well as customers and consultants to better understand the situation and work towards a "speedy resolution" within an estimated two weeks. 

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"There is a possibility this may be related to foreign-labour issues which we have already resolved, save for one more issue with regard to retrospective payment of recruitment fees by our workers to agents prior to January 2019, without our knowledge," Top Glove said. 

The company added that it has been bearing all recruitment fees since January last year, when its zero recruitment fee policy was implemented. "Over the past few months, we have been working on this issue, which involves extensive tracing, to establish the correct amount to be paid back to our workers, on behalf of the previous agents." Top Glove now estimates this amount to be about RM20 million (S$6.5 million) to RM50 million. 

In a briefing held on Thursday evening, Top Glove said that shipments from the two affected units represent half of its US sales and 12.5 per cent of its group sales, Reuters reported. The company also noted that it can still ship to the US via its other subsidiaries. 

Separately, CGS-CIMB analyst, Ong Khang Chuen, told The Business Times (BT) on Thursday that the share price correction on the glove sector which began early this week, was triggered with several local brokers imposing trading restrictions on selected medical supplier counters, given high credit exposure to the sector. Sentiment was later also likely affected by positive updates on Covid-19 vaccines, and Top Glove's subsidiaries being placed on the US Customs' detention list, said Mr Ong.

Nonetheless, CGS-CIMB remains positive on the sector, as it still sees a shortage in glove supply and expects average selling prices to remain high, amid an uptick in daily Covid-19 cases worldwide.

Asked about possible reasons for the recent share price movements, one broker told BT on Thursday that while algorithmic trading could be a contributing factor to recent price falls, there was "no way to attribute (the falls) to it convincingly". "There are various algorithmic traders in the market currently, based on market feedback. They tend to trade the liquid stocks actively, and can add to the price swings," the broker said. 

Across the Causeway, seven glove stocks on Bursa Malaysia had displayed a uniform V-shape pattern on Tuesday, with the counters plummeting shortly after 4pm, and rebounding before the closing bell, The Edge reported. The sudden plunge among the stocks during the final trading hours was in the range of 15 per cent to 25 per cent, sparking "intrigue" among market observers, the Malaysian publication reported.

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