KUALA LUMPUR, Jan 23 (Bernama) -- Bursa Malaysia’s benchmark index recouped earlier losses to settle higher, maintaining a more than six-year high, buoyed by continued buying interest in technology stocks, while the strengthening of the ringgit against the US dollar further lifted investor sentiment. At 2.27 pm today, the local currency strengthened to 3.9992 versus the greenback, its strongest level in more than seven years. It was last seen at this level on June 18, 2018, at 3.9960/9990. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.85 points or 0.17 per cent to 1,719.99 from yesterday’s close of 1,717.14. The index surpassed its previous peak of 1,719.00 recorded on Feb 26, 2019. The barometer index opened 1.30 points lower at 1,715.84 and moved between an intraday low of 1,711.89 in early trade and a high of 1,723.41 in late afternoon before slipping slightly toward the close. However, market breadth was negative with decl...
Malaysia’s strengthening ringgit — up more than 10% against the US dollar in 2025 — is increasingly squeezing earnings for export-heavy glove makers, just as the industry struggles with excess capacity and weak pricing power.
While a firm ringgit reduces macro risk and improves foreign investor confidence, it directly compresses margins for companies whose revenues are overwhelmingly USD-denominated.
What’s Happening on the Ground
Over 90% of glove sales are priced in US dollars
A stronger ringgit means lower translated revenue in MYR
Weak demand recovery forces producers to sacrifice pricing to defend volume
At Top Glove, Q1 sales volume grew 17% YoY — but average selling prices fell 11%, largely due to FX effects.
Peers such as Hartalega and Supermax have also reported earnings pressure or widening losses.
Why Glove Makers Are More Exposed Than Other Exporters
Unlike palm oil or large tech exporters, glove companies:
Operate on thin margins
Have limited hedging flexibility
Face price-sensitive customers
Carry high working capital needs
This makes it harder for them to:
Hold USD cash balances
Absorb FX volatility
Pass higher prices to customers without losing volume
Key Trading Takeaways for Investors
1. Ringgit Strength = Structural Earnings Headwind
As long as USD/MYR stays strong (or weakens further):
Earnings recovery for glove makers will likely lag volume recovery
Any rebound in share prices may be technically driven, not fundamental
FX is now a first-order risk, not a secondary factor.
2. Volume Growth ≠ Margin Recovery
Recent volume gains may look encouraging, but analysts see signs of:
Market share defense at the expense of margins
Price competition intensifying as capacity remains high
This caps upside unless:
USD weakens materially, or
Industry capacity rationalization accelerates
3. Limited Pricing Power in the Near Term
If glove makers attempt to raise ASPs to offset FX losses:
Short-term demand risks falling
Buyers may shift to lower-cost competitors
This keeps earnings visibility cloudy through 2026.
4. Relative Losers vs Ringgit Strength Beneficiaries
A strong ringgit generally favors:
Banks
Domestic consumption plays
Import-heavy sectors
Export-heavy glove names are on the wrong side of this macro trend.
Bottom Line
For Malaysia-focused investors, the glove sector remains FX-constrained and margin-fragile. Volume recovery alone is not enough — without currency relief or meaningful industry consolidation, earnings upside stays limited.
In the current environment, glove stocks are better viewed as short-term trading names, not conviction long-term holds — unless USD/MYR reverses meaningfully or sector fundamentals reset.
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