KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
After months of deep corrections and industry pessimism, Malaysia’s glove sector is showing early signs of a turnaround—offering investors an opportunity to accumulate select counters at multi-year low valuations.
In the latest sector review, market analysts highlighted that glove manufacturers are currently trading at -2 standard deviations below their 1-year forward P/B average, a level that typically signals deep-value territory.
Valuations Reflect Fear, Not Fundamentals
Despite the sector being in a down-cycle, companies like Hartalega (HARTA) and Kossan Rubber (KOSSAN)continue to post profits and maintain operational stability. With HARTA trading at 1.3x P/B and KOSSAN at 1.0x, their valuations appear overly depressed—especially in light of improving demand visibility.
Unlike previous downturns where companies dipped into the red, most glove players today remain operationally resilient, supported by leaner inventories and more disciplined supply-side dynamics.
Early Signs of Demand Recovery
The US-China tariff escalation triggered a rush of front-loaded glove orders in early 2025. As the inventory drawdown cycle unwinds, Malaysian glove makers are beginning to see orders returning.
Hartalega forecasts a 1–8% QoQ rise in sales volume for 1QFY26.
Top Glove projects 15–20% QoQ sales growth in 4QFY25, with utilisation reaching 65% in June.
These early improvements suggest that while the tariff-led demand surge has tapered, underlying demand recovery is still underway, and restocking is resuming.
Geopolitical Shifts Could Tip the Balance
In a significant move, the European Commission’s exclusion of Chinese medical suppliers from large public procurement contracts (>€5m) is likely to benefit alternative sources—Malaysia being the most viable.
Similarly, once the US 90-day tariff truce expires, importers may increasingly favour Malaysian gloves over Chinese alternatives, which could face combined tariffs of up to 130%, raising their average selling prices to USD27–28.80 per 1,000 pieces—well above Malaysia’s average of USD19–20.
Investor Strategy: Is It Time to Revisit Glove Stocks?
Glove stocks have dropped between 20%–48% YTD, mostly due to fears of Chinese overcapacity. But with utilisation rates rising, pricing power stabilising, and structural tailwinds from global procurement shifts, investors with medium-term horizons may find compelling entry points.
Watchlist Highlights:
| Company | Potential Upside | Notable Catalyst |
|---|---|---|
| Hartalega | +97.5% | Rebounding sales, policy-driven EU demand |
| Kossan | +82.4% | Strong balance sheet, deep valuation |
| Top Glove | +33.8% | Volume recovery, rising utilisation |
| Supermax | +18.6% | Market-neutral but benefitting indirectly |
Conclusion:
While near-term earnings may stay subdued, valuation re-rating could be triggered by positive policy shifts, demand recovery, and easing oversupply concerns. For investors seeking exposure to a contrarian recovery story, Malaysian glove stocks—particularly Hartalega and Kossan—offer potential for outsized returns as the sector bottoms out.
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