KUALA LUMPUR (Aug 17): Following the worst year to date selldown last week, glove makers continued to extend their losses in the morning trading session today, with Supermax Corp Bhd, Top Glove Corp Bhd, Kossan Rubber Industries Bhd and Hartalega Holdings Bhd appearing in the top losers list on Bursa Malaysia.
The newsflow on the glove sector seems to have turned negative. The news that a vaccine would be available for mass production in months spooked the glove bulls last week and sparked heavy selldown on them.
Adding fuel to the selling this morning, Maybank IB Research highlighted the juxtaposition of supernormal profits being generated by the glove sector and the government’s extremely challenging fiscal outlook, raising the risk of windfall taxes being imposed on glove manufacturers.
The investment bank foresees the likelihood of the government announcing the windfall tax in the upcoming National Budget 2020/21 in November.
The comment on the risk of a windfall tax came after the strong rally on the glove makers that started in April contrasted with the government’s tight fiscal position becoming apparent. It needs resources to stimulate economic growth.
Maybank IB cited the example of the windfall tax that was imposed on the plantation sector in 1998, and a similar levy on the independent power producers in 2008 which was scrapped one month later.
As at the noon break, Top Glove slid 4.95% or RM11.8 at RM22.64, taking first place on the top-decliner’s list on Bursa Malaysia.
Supermax fell 5.02% or 90 sen at RM17.02, followed by Kossan which sank 5.28% or 76 sen, and Hartalega which declined 3.25% or 52 sen at RM15.5. Supermax was the third-most decliner on Bursa Malaysia, while Kossan ranked fourth among the decliners, followed by Hartalega at fifth place.
Smaller-cap glove companies were also not spared from the selldown. Rubberex Corp (M) Bhd was down by 4.35% or 20 sen at RM4.40, Comfort Gloves Bhd also declined 3.89% or 15 sen to RM3.71, and Careplus Group Bhd fell 2.69% or nine sen to RM3.26.–The Edge