The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
CIMB Securities has expressed a positive outlook for the glove industry, despite cost pressures from Budget 2025 measures. These cost pressures arise from higher labour costs, including increased foreign worker levies and a minimum wage hike. However, analysts remain confident that glove manufacturers will pass these increased costs to consumers by raising average selling prices (ASPs).
With labour costs making up around 9% to 11% of total production costs, production costs are estimated to rise by 1.7% to 2.4%. Glove makers are responding by raising ASPs between 5% and 10%, and prices are now between US$21 to US$23 per 1,000 pieces for orders slated for December and January delivery.
A significant tailwind for Malaysian glove manufacturers comes from the upcoming hike in US tariffs on gloves from China. Starting in January 2025, US tariffs on medical and surgical gloves from China will rise from 7.5% to 50%, with further increases to 100% by 2026. This development is expected to shift demand to Malaysian producers, especially from US-based clients, who make up 40% of global glove imports.
Despite intensified competition in non-US markets, CIMB maintains an 'overweight' rating on the rubber glove sector. Hartalega Holdings Bhd and Top Glove Corp Bhd are highlighted as key players, with 'buy' ratings and target prices set at RM3.12 and RM1.25, respectively.
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