Malaysia glove maker shares including Top Glove after the US was expected to finalise tariffs on Chinese goods this month.
Top Glove jumped as much as 32 per cent, the most ever, while Hartalega Holdings rallied by the 30 per cent limit. The gains come a day after Thailand peers spiked as analysts point out that South-east Asian producers will be the main beneficiaries. Malaysia’s market was closed for a holiday on Monday.
Tariffs on billions of dollars in Chinese goods, including medical products, are being finalised by President Joe Biden’s administration following a proposal to raise levies in May, an official said late last week. The new tariffs are higher and will be implemented more quickly than expected, according to Citigroup.
US tariffs on Chinese medical gloves will rise to 50 per cent in 2025 and 100 per cent in 2026, Citi analysts wrote in a report. That’s up from a 25 per cent hike proposed in May, which was to take effect in 2026.
The tariffs are “poised to revitalise investors’ sentiment on the Malaysian glove sector,” Jack Goh, an analyst at UOB Kay Hian, wrote in a report. “With the sector’s post-pandemic recovery eclipsing earnings amid demand moderation, domestic glove makers should progressively reclaim market share from China.”
The impending levy provides yet another fillip for South-east Asian equities, which are already bolstered by growing bets the region will be a beneficiary from a Federal Reserve interest-rate pivot. Four of the five best-performing Asian stock benchmarks this month are from the region, with inflows in September poised for the highest level since April 2022.
Tuesday’s rally revives a popular trade from 2020 when glove makers became market darlings as governments globally rushed to procure surgical and latex gloves to slow the spread of Covid 19. At one point, more than US$1 of every US$10 invested in the Malaysian stock market was a bet on gloves.
Brokers are already taking note, with at least five sell-side analysts upgrading Top Glove this week, according to data compiled by Bloomberg. There were also several upgrades for Hartalega. Shares of Kossan Rubber Industries climbed as much as 26 per cent while Supermax jumped 27 per cent.
“This tariff move removes the underutilization of glove makers with a very high margin,” said Danny Wong, chief executive officer of Areca Capital Sdn “Profits are coming back.” BLOOMBERG
