Eye-popping rally in Asian glove-maker stocks will continue, says Citi

The Covid-19-led boom in demand for rubber gloves is not showing any sign of abating. (Bernama pic)

KUALA LUMPUR: The astonishing rally in Asian glove-maker stocks will extend further as the coronavirus-led boom in demand shows no sign of abating, according to Citigroup Inc.

Top Glove Corp and Kossan Rubber Industries can each climb by about 75% over the next 12 months as the pandemic drives unprecedented growth in sales and profits for the sector, analyst Megat Fais wrote in a note yesterday.

Glove makers are among the top gainers in a number of global equity indexes this year, outperforming many stay-at-home stocks, gold and even Tesla Inc.

Shares of Top Glove, the world’s largest maker, have risen more than 400% this year while those of smaller rival Supermax Corp have jumped over 1,300%.

The stocks remain highly sensitive to any news about the virus. Top Glove and its Malaysian peers fell about 5% to 10% today after President Vladimir Putin said Russia cleared the world’s first Covid-19 vaccine for use and Moderna Inc reached a deal with the Trump administration to supply its own experimental vaccine to the US.

Megat Fais is not concerned by such blips, noting that the lead time on orders to Asian glove makers has lengthened to about 12 months from pre-Covid levels of one to two months.

“Even with a vaccine, a structural step-up in glove usage is on the cards as the pandemic may well accelerate the narrowing of the gap between emerging-market and developed-market glove consumption,” he wrote.