Covid-19 vaccines puncture Malaysian rubber glove maker’s stock rally

Shares in the world’s largest rubber glove maker recorded their worst month since the global financial crisis after the distribution of Covid-19 vaccines punctured a dazzling rally triggered by the pandemic last year.

Malaysia-based Top Glove’s stock fell 22 per cent in February, wiping more than $3bn in market value off the group. That marks the shares’ worst monthly performance since March 2008.

Top Glove’s shares surged more than 300 per cent in 2020 on huge demand as governments worldwide rushed to secure personal protective equipment. Alongside ecommerce, the rubber glove industry emerged as one of the most visible corporate winners of the pandemic.

But that boom has now threatened to turn into a bust following the successful development of Covid-19 jabs and the start of vaccine drives worldwide. 

“Because of the vaccine rollout there is little to no buying interest” in rubber glove maker stocks, said David Lai, an equity analyst at brokerage Interpac Securities.

The sell-off has reverberated across Malaysia’s rubber glove industry, with peers Hartalega, Supermax and Kossan sliding 22 per cent, 29 per cent and 12 per cent respectively in February. 

Analysts have attributed the tumble in Top Glove’s stock to the falling number of Covid-19 cases in big export markets such as the US, where the pace of vaccinations has begun to pick up.

But they pointed out that the financials of Top Glove and its rivals remained strong, while selling prices of gloves are expected to stay stable this year. Top Glove posted a record quarterly revenue of RM4.76bn ($1.18bn), a 294 per cent year-on-year jump, in the three months to November.

The drop in Top Glove’s shares in recent weeks caught the attention of retail traders in Malaysia. Top Glove’s stock rose in late January after members of a Reddit forum called r/BursaBets began bidding up shares of local rubber glove companies. The episode was also a sign that retail investor activism spurred by the Reddit group r/WallStreetBets, which helped propel shares in video games retailer GameStop into the stratosphere, had spilled over into Asia.

Top Glove’s woes go beyond its share performance. Late last year, it was forced to temporarily cease operations at 28 of its Malaysian facilities. A Top Glove worker died in December after the company was linked to the country’s largest Covid-19 cluster, with more than 5,000 cases.

Kuala Lumpur said in December that it had recommended filing charges after launching 19 investigations into Top Glove’s worker dormitories, which it described as crammed, uncomfortable and lacking proper ventilation.

Top Glove in November said it had tested more than 6,000 workers, about half of whom had coronavirus.