New virus variant boosts sagging glove maker stocks in South-east Asia

[SINGAPORE] The emergence of a new coronavirus variant in South Africa is giving a new lease of life to shares of South-east Asian glove makers, which had slumped this year after becoming one of the hottest pandemic trades in 2020.

Producers of medical gloves surged Friday (Nov 26) on the possibility the new virus strain causes a jump in demand for protective gear, just like Covid-19 did last year.

Sector bellwether Top Glove Corporation jumped as much as 15 per cent in Malaysia, the most since September 2020. Smaller peer Supermax Corporation climbed as much as 16 per cent, while Hartalega Holdings rose more than 11 per cent. Similar stocks listed in Singapore and Thailand also jumped.

The magnitude of the bounce was biggest in months for some of the cohort, which had given up most of their pandemic gains this year amid vaccine rollouts, the economic reopening and forced labour allegations. An equal-weighted basket of the Malaysian manufacturers more than halved this year, with the 3 becoming the worst performers in the MSCI Asean Index.

The rally was powerful enough to make the FTSE Bursa Malaysia KLCI benchmark outperform the MSCI Asia Pacific Index. It saw a modest 0.5 per cent decline compared to a 1.9 per cent slump in the regional benchmark.

At one point last year, more than US$1 of every US$10 invested in the Malaysian stock market was a bet on gloves - a feat that makes the South-east Asian nation a play on global hygiene, much like South Korea and Taiwan are for semiconductors.

BLOOMBERG