Malaysian Glove Stocks Soar as US Tariff Hike Hits Chinese Competitors

Shares of Malaysian glove producers soared on Wednesday, buoyed by news of the US implementing a significant tariff increase on Chinese rubber medical and surgical gloves, up to 25% from the previous 7.5%.

Leading the rally, Top Glove Corp Bhd $TOPGLOV 7113.MY$ , the world's preeminent glove producer by volume, experienced a sharp uptick of as much as 29% to RM1.24 in morning trade, marking a peak not seen since May 2023. By the noon recess, the share price had escalated by 25 sen or 26.04%, culminating in a market capitalization of RM9.88 billion.

Stock Heatmap

Source: Malaysiastock.biz

Hartalega Holdings Bhd $HARTA 5168.MY$ likewise saw a notable gains to RM3.82, its new high since June 2022, thus inflating its market valuation to RM12.82 billion. Complementing the upward trajectory, Supermax Corp Bhd $SUPERMX 7106.MY$ and Kossan Rubber Industries Bhd $KOSSAN 7153.MY$ reached four-month and three-month highs, respectively, showcasing robust market capitalization figures.

Based on year to date performances, Top Glove leading with a 32.97% rise in shares, followed by Hartalega with 38.52%, Kossan marking a 48.4% upswing, and Supermax registering a growth of 9.57%.

Daily Price Chart of Malaysian Glove Stocks

Source: Tradingview

Why Malaysia Glove Stocks Likely Benefit from US Tariff Policy?
The US's strategic imposition of tariffs, announced by President Joe Biden, represents a concerted effort to protect domestic industries from what is perceived as unfair international competition.

Market analysts opine that the increased tariffs will escalate the market prices of Chinese gloves, thus rendering Malaysian-manufactured gloves more economically viable for US importers, given the newly-narrowed price differential. Consequently, Malaysian glove manufacturers are presented with an opportunity to reclaim market shares that were diminished due to fierce pricing competition with China since 2021.

With the expectation of adjusted selling prices for Chinese gloves, Malaysian products, which are currently tariff-exempt in the US, may enjoy a strengthened market position, as indicated by a report from RHB Investment Bank. UOB Kay Hian analyst suggests that investors are likely to scrutinize the medium-term market dynamics, potentially impacted by the diminished exports of Chinese gloves.

Glove Sector Outlook
Looking into the future earnings of local glove makers, there is a forecast of a return to pre-pandemic profitability by 2026. This optimism hinges on anticipated growth in customer demand, improvements in operational efficiency, and beneficial price cycles, alongside stable costs of raw materials.

The bullish sentiment extends beyond the key industry players, with smaller entities like Comfort Gloves Bhd, Hextar Healthcare Bhd, and Careplus Group Bhd also experiencing notable market performance, signifying overall sectoral optimism as a response to global trade policy shifts.