Glove makers on SGX see sell-off after bullish run

Over the past six months, Top Glove has risen some 366 per cent.
Over the past six months, Top Glove has risen some 366 per cent.PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - The shares of glove makers on the Singapore bourse saw sharp sell-offs earlier this week, after a bullish run over the past six months, thanks to a boost in demand for gloves amid the Covid-19 pandemic.

The trio of rubber glove plays - Top Glove, UG Healthcare and Riverstone Holdings - all registered price falls, albeit to varying degrees.

UG Healthcare plunged 10.7 per cent or $0.21 to close at $1.76 on Monday (July 13), Riverstone shed 6.6 per cent or $0.22 to $3.10 on Tuesday, while Top Glove slipped 3.5 per cent or $0.27 to finish at $7.54 on Tuesday.

So far this week, UG Healthcare has tumbled 21.8 per cent from July 13 to 15, while Riverstone has fallen 5.8 per cent, ShareInvestor data shows. They were up 48.1 per cent and 17.7 per cent respectively last week from July 6 to 9.

Meanwhile, Top Glove seems to be holding on to its weekly gains, for now. The counter rose 6.1 per cent from July 13 to 15, after advancing 14.7 per cent last week.

One analyst The Business Times spoke to on Thursday (July 16) noted a "very fierce trading pattern" among the glove counters. "A lot of optimism was priced in, prices ran up well ahead of valuations and subsequently corrected down," the analyst said.

Over the past six months, UG Healthcare has gained almost 800 per cent, Top Glove has risen some 366 per cent, and Riverstone has climbed over 220 per cent, according to Bloomberg data.

The analyst added that some brokerages had imposed trading restrictions on some of these stocks in recent days, after a sharp run-up in prices.

Asked about possible reasons for the recent share price movements, the analyst noted that the price falls come as market euphoria slows down.

He added that algorithmic trading could be a contributing factor, though "there is no way to attribute to it convincingly".

"There are various algorithmic traders in the market currently based on market feedback. They tend to trade the liquid stocks actively, and can add to the price swings," the analyst said.

 
 

Looking ahead, he noted that the shares of these glove plays should see more rational trading, with prices stabilising and finding some support.

In a research note on Wednesday, DBS analyst Ling Lee Keng raised the target price on Riverstone to $3.90, up from $3.09 previously, citing rising glove prices and fatter margins.

Separately, BT on Wednesday reported that the recent spike in gloves demand might mask woes in the wider rubber industry.

As at 1.24pm on Thursday, shares of UG Healthcare were trading at $1.36, down $0.18 or 11.7 per cent, while shares in Riverstone were trading at $3.02, down $0.05 or 1.6 per cent.

Top Glove shares last traded at $7.18, down $0.12 or 1.6 per cent, before the company requested a trading halt at 12.35pm.