HOW one’s fortune can change in the blink of an eye!
Could there be a better analogy to depict the misfortune of Malaysia’s Big-Four glove makers who have to confront the double whammy of not only being suffocated by a decline in average selling price (ASP) but also the Government’s mulling of new tax regimes to replenish its coffers?
To re-cap, the Government is eyeing the imposition of capital gains tax (on stock trading) and one-off higher tax rate on windfall profit which has very broadly dampened market sentiment on Bursa Malaysia in recent times.
And given their meteoric earnings since demand for gloves spiralled many folds at the height of the COVID-19 pandemic, glove makers – both big and small – surely make easy prey for windfall tax.
Unless the relevant authorities can swiftly clarifies the quantum of the taxes or the mannerism of their implementation, investors – whether retailers or institutional funds – will shy away from being associated with glove stocks over concerns of earnings depreciation which will ultimately erode share price or even dividend payouts.
With many funds having started switching to recovery stocks as all economy sectors and inter-state travels will soon be fully restored, all Big-Four glove makers continue to hover close to their 52-week low at the close of today’s mid-day trading session.
This is despite the FBM KLCI having firmed 8.4 points or 0.55% with gainers outpacing losers with 432 to 330.
Top Glove Corp Bhd shed 15 sen or 5.34% to RM2.66 with 24.08 million shares traded (market cap: RM21.83 bil); Hartalega Holdings Bhd slipped 14 sen or 2.4% to RM5.70 with 2.1 million shares traded (market cap: RM19.54 bil); Supermax Corp Bhd edged down 12 sen or 5.02% to RM2.27 with 6.6 million shares traded (market cap: RM6.18 bil) and Kossan Rubber Industries Bhd retreated 8 sen or 3.33% to RM2.32 with 3 million shares traded (market cap: RM5.93 bil).
As if ASP decline and windfall tax are not bad enough, the Big-Four glove stocks have also to contend with regulated short selling (RSS) with Top Glove – the world’s largest glove maker – having emerged as the top short selling counter on Monday (Sept 20) in terms of volume and value (5.53 million shares worth RM15.89 mil).
Hartalega and Supermax Holdings, too, were also not spared by emerging as one of the top short selling counters in during the same period. Hartalega saw 357,500 shares worth RM2.20 mil shorted while Supermax had 1.08 million shares valued at RM2.64 million shorted. – Sept 23, 2021
