KUALA LUMPUR: A whopping RM5.23 billion was wiped from the collective market capitalisation (market cap) of Bursa Malaysia's four largest rubber glovemakers yesterday due to panic selling induced by Hartalega Holdings Bhd.
Top Glove Corp Bhd, the second largest in the pack, nearly joined Hartalega and Kossan Rubber Industries Bhd, whose shares were halted for intra-day short selling (IDSS) after breaching the daily limit threshold.
The share-dumping domino effect caused Top Glove's stock to tumble by as much as 16 sen or 13.79 per cent to RM1 per share, with 99.34 million units changing hands.
Under Bursa Malaysia's short-selling rules, IDSS activities will be suspended if a stock under RM1 per share loses more than a daily limit of 15 sen a share. The daily limit is 15 per cent for stocks above RM1 a share.
Hartalega and Kossan fell 23.2 per cent to RM2.61 and 16.17 per cent to RM1.97, respectively, before trading of their shares was suspended for IDSS.
Supermax Corp Bhd, the smallest player in the group, also experienced a decline, falling nine sen or 7.96 per cent to RM1.04, with 43.28 million shares traded. Its market cap stood at RM2.83 billion.
Collectively, these companies, dubbed Bursa Malaysia's Big Four glove stocks, hold a combined market cap of RM25.01 billion.
Year-to-date, Hartalega's market value has shrunk by 34.26 per cent, Top Glove by 25.93 per cent, Kossan by 29.14 per cent and Supermax by 20 per cent.
Yesterday's heavy selldown in glove stocks followed news of Hartalega's bleak outlook for the remainder of the year, shared during an earnings conference call, according to a report.
Hartalega, the world's largest nitrile glove producer, had earlier reported a 12.82 per cent decline in quarterly earnings due to higher operating expenses.
Glove stocks, especially the Big Four, have been known for their tightly linked price movements, particularly since the Covid-19 pandemic, which saw a historical surge in global demand for rubber gloves.
The euphoria for glove stocks in 2020 led investors to even scramble for shares in smaller companies, driving their prices to record highs. When the rallies ceased, a widespread sell-off ensued.
One notable instance was in June 2020, when a staggering RM10.5 billion in market cap was wiped out from the four counters in a single day following news of a Covid-19 vaccine breakthrough.
Today, investors remain highly sensitive to any developments affecting the Big Four, with ripple effects often extending, albeit to a lesser extent, to smaller glove manufacturers as well.
Among the smaller glovemakers impacted by Monday's selling pressure were Comfort Gloves Bhd, Hextar Healthcare Bhd and Careplus Group Bhd.
Careplus' share price was down one sen or 4.17 per cent to 23 sen apiece, Comfort Gloves dropped by three sen or 7.69 per cent to 36 sen, while Hextar closed half a sen or 2.94 per cent lower at 16.5 sen a share.
The trio has a combined market capitalisation of RM583 million.
According to a market strategist, glove counters were already in a downtrend before yesterday's sell-off, but a slight rebound is expected in morning trade today.
"We may see a rebound (today) but expect prices to drop again in the next few days," said TradeVSA System Sdn Bhd chief technology officer Martin Wong.
TradeVSA is a homegrown financial technology firm that leverages artificial intelligence to predict buy and sell signals using Volume Spread Analysis.
It is the first company in Malaysia to receive a digital investment advice license from the Securities Commission.
