“The rally in glove makers reminds many of Tesla but the sector’s earnings outlook is more certain than that of Tesla,” said Ross Cameron, a fund manager at Northcape Capital Ltd., which overseas about $7 billion assets globally. He added with the short-selling ban having had a minor contribution to the rally that “we expect the sector to report significantly more than 100% earnings growth next year.
Rubber glove makers are attracting more investor fervour compared to electric cars and flame throwers of Elon Musk in Southeast Asia. Top Glove Corp. is up 389% this year in Kuala Lumpur, largest on the MSCI Asia Pacific Index, while Supermax Corp. has leapt more than 1,000%, compared with Tesla’s 259, with the boom in glove demand caused by the coronavirus pandemic, aided by a short-selling ban in Malaysia till year-end.
The top three glove makers added about 109 billion ringgit ($26 billion ) in combined market value this year. More than $1 of every $10 invested in the nation’s stock market right now is a bet on gloves – a feat enabling the Southeast Asian nation as a play on global hygiene.
This relatively low-tech stock trade is making Tesla Inc.’s dizzying rally look like an under-performance.
Top Glove resumed its rally Friday even after the U.S. moved to block imports from two of its units. Fund managers at Northcape and Samsung Asset Management have increased their bets on the sector this year calling the shift in glove demand structural with many market participants still behind the curve. Covid-19 vaccine development has slowed down glove makers’ shares. Due to detention order placed by US Customs and Border Patrol on disposable gloves, Top Glove stated the issue might be foreign labour and they are reaching out to US Customs to seek to resolve the matter within two weeks.
Nonetheless, the order books have swelled, glove prices have skyrocketed and companies are aggressively expanding their capacity to meet orders.

Read EquityPandit’s Nifty Outlook for the Week