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KUALA LUMPUR (Oct 13): Share  prices of rubber glove makers stole the limelight on Bursa Malaysia on Thursday (Oct 13), with Hartalega Holdings Bhd' s shares leading the gains in terms of value gains.

When contacted, Malacca Securities head of research Loui Low Ley Yee told    The Edge  that rotational play kicked in, as investors swapped sectors from technology to rubber gloves, as the market has fully priced in the anticipated downside risk for gloves including acute oversupply and margin compression due to the falling average selling price (ASP) of gloves.

Because the market has priced in everything (downside risks), any uptick or rebound in ASP, gloves will benefit. Investors have factored in (risks such as) overstretch  in valuation and drop  in earnings   now perhaps it has [already hit]  bottom for the (glove stocks) earnings and will recover soon.

In contrast, [the] technology [sector] has more room to drop due to overstretching in valuation. The sector' s earnings are expected to come down, given the layoffs news from the big tech companies, coupled with the US ban on chips  sales to China, this could be a repercussion towards the downward cycle of the demand (for semiconductor products) and that worries the market. So, we should be seeing a slowdown in technology companies earnings. That is what I am anticipating. So, glove stocks [are a] safer bet to invest in, Low added.

Low also quoted Malaysian Rubber Glove Manufacturing Association (Margma) as saying that glove supply-demand equilibrium is expected within six- to nine months. To recap, Margma president Dr Supramaniam Shanmugan had  last month said the normalisation of equilibrium conditions for gloves supply-demand will occur within six to nine months, based on the depletion of inventory in the pipeline.

Against this backdrop, Low said investors will have to start positioning themselves for glove stocks, in anticipation of glove counters earnings stabilising amid a normalised ASP by then.

When asked if the value of glove stocks has emerged, the head of research said investors will have to wait until the glove companies earnings stabilise.

Meanwhile, Rakuten Trade Sdn Bhd vice president of equity research Thong Pak Leng said positive performance of glove stocks was due to technical rebound, after falling significantly this year.  

Hartalega closed at its highest in nearly two months at RM1.84, after it rose 11 sen or 6.36%, making it the bourse' s fourth largest gainer by value. It earlier hit an intraday high of RM1.89. At RM1.84, it had a market capitalisation of RM6.31 billion.

Hartalega was also the sixth most actively-traded counter of the day, after it saw some 33.52 million shares exchanging  hands.

Top Glove, the most actively-traded stock of the day that saw 130.06 million shares done, gained 5.5 sen or 8.66% to close at 69 sen & mdash its highest since Sept 20, when it traded at 71 sen.

It traded between 63.5 sen and 71 sen during Thursday' s session, compared to the closing price of 63.5 sen on Wednesday. Top Glove' s market value stood at RM5.66 billion with the current closing price of 69 sen.

Similarly, Supermax Corp Bhd and Kossan Rubber Industries Bhd which round up the top four of the rubber glove sector, together with Top Glove and Hartalega  also ended Thursday' s session with positive gains.

Supermax, which was the fourth most actively-traded stock, climbed 6.5 sen or 9.15% higher to settle at 77.5 sen, for a market capitalisation of RM2.11 billion.   It saw 36.98 million shares traded.

Kossan Rubber  closed up four sen or 3.64% at RM1.14, for a market capitalisation of RM2.92 billion, after 8.25 million shares were traded.

Notwithstanding that, the four glove makers share prices have come down significantly from the beginning of this year.

Shares of  Top Glove have  plummeted 71.13% or RM1.70 from RM2.39 on Jan 3 this year, while Hartalega has lost 67.38% or RM3.80  from RM5.64 at the beginning of the year.

Supermax' s share price has plunged 45.8% or 65 sen from RM1.43 during the same periods, while Kossan has shrunk 38.17% or 72 sen from RM1.86.

In terms of their smaller counterparts, they have also made gains on Thursday.

Careplus Group Bhd closed 6.5 sen or 26% higher at 31.5 sen, valuing it at RM181 million, while Comfort Gloves Bhd ended the session 2.5 sen or 5.56% higher at 47.5 sen, bringing its market value to RM277 million.

Hextar Healthcare Bhd, previously known as Rubberex Corp Bhd, rose  marginally by one sen or 2.27% to settle at 45 sen, for a market capitalisation of RM412 million.

Bursa' s Healthcare Index, which includes glove manufacturers, pharmaceutical companies and hospital operators, rose the most on Thursday in percentage terms at 3.35%, as share prices of glove manufacturers climbed. The index closed up 49.91 points to 1,539.05 on Thursday, from 1,487.47 on Wednesday. 

Meanwhile, Bursa' s Technology index fell 1.54% or 0.88 points to settle at 56.23, from 56.99. 

Nonetheless, the gains in Top Glove and Hartalega, both constituents of the benchmark index FBM KLCI, could not stem the decline in  FBM KLCI, which closed 0.52% or 7.21 points lower at 1,373.36.