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Hot stocks: Medical plays, glove makers soar as Wuhan virus fears spread

WITH deaths from the Wuhan coronavirus tripling over the weekend and confirmed cases hitting 3,000, investors continue to pile in on Singapore-listed medical firms and glove makers, with many making considerable gains on high volumes during Tuesday's early session.

Of the 1.49 billion securities traded on the Singapore bourse by the midday break, 20 per cent of the volume was attributable to a trio of usually thinly traded medical penny plays: Medtecs International, AsiaMedic Limited and Healthway Medical.

Shares in Medtecs, a manufacturer and distributor of medical consumables, surged 39.4 per cent or 4.1 Singapore cents to 14.5 cents - an all-time high - on 182 million shares changing hands, the most on the Singapore Exchange (SGX). AsiaMedic added 0.2 Singapore cent or 13.3 per cent to trade at 1.7 cents, while Healthway was up 0.6 Singapore cent or 15.4 per cent to 4.5 cents.

Among other medical listings, Thomson Medical shares were 0.2 Singapore cent or 3.2 per cent higher at 6.4 cents and IHH Healthcare, which has eight ParkwayMedical health centres in China, added S$0.04 or 2.1 per cent to S$1.95. 

Given investor worries of a contagion, observers were not surprised by the price actions in such listings.

One trader told The Business Times: "The fear is very much real, especially since the outbreak occured around the Chinese New Year, which is considered a peak period of travel in China. With the situation likely to get worse before it improves, such listings could see price sustained in the near term."

The recent virus outbreak has also brought increased attention to Malaysian glove makers listed in Singapore.

Top Glove, one of the largest manufacturers of rubber gloves globally, surged S$0.29 or 15.3 per cent to S$1.84. Riverstone Holdings, where the manufacture of healthcare gloves account for about 70 per cent of revenue, jumped S$0.12 or 11.8 per cent to S$1.14.

Just prior to Chinese New Year eve on Jan 24, Citi Research upgraded its call on Top Glove to "buy", with the firm a beneficiary of a potential pandemic outbreak following the sharp escalation of the Wuhan virus.

"Top Glove, the largest by capacity, also has the widest clients exposure (more than 2,000 customers), thus stand to benefit the most should this outbreak become a global emergency," Citi Research analyst Megat Fais said.

He noted that revenue for Top Glove more than doubled during the Sars and avian flu outbreaks. Revenue grew 36 per cent during the swine flu outbreak and increased 13 per cent during the Middle East respiratory syndrome (Mers) epidemic.