Top Glove ousted from 3 ESG-friendly indexes

TOP Glove Corp Bhd has been removed from three ESG (environmental, social and governance) indexes – namely the FTSE4Good Bursa Malaysia, ASEAN 5 and Emerging Markets Index – following the June 2021 FTSE4Good Index Semi Annual Review.

UOB Kay Hian Research reckoned that removal of the world’s largest glove maker from the ESG indexes may be in tandem with the US Customs and Border Protection’s (CBP) detention/withhold release order (WRO).

“Recall that the WRO had already been implemented during the previous FTSE review period, but was further tightened in March to restrict all Top Glove sales from Malaysia to the US,” justified analyst Jacquelyn Yow Hui Li in a strategy note.

“Having said that, both FGV Holdings Bhd and Sime Darby Plantations Bhd are still in the FTSE4Good Index despite the US CBP detention order.”

Commenting on forced labour issue which is linked to Top Glove’s WRO, UOB Kay Hian Research highlighted growing concerns of alleged forced labour among local manufacturers and companies which are sparked by migrant worker and labour rights activist and researcher Andy Hall.

Having submitted an increasing number of petitions to the US CBP alleging forced labour in the operations of several local manufacturers and plantation companies, Hall’s research and influence appear to be spreading, according to the research house.

“Some companies that Andy Hall has filed petitions against are FGV Holdings, Sime Darby Plantations, Top Glove, Hartalega Holdings Bhd, Supermax Corp Bhd and ATA IMS Bhd,” noted UOB Kay Hian Research.

“We reckon that Hall’s strong influence may post a threat to other companies in industries such as technology and furniture.”

To invest on the ESG theme, UOB Kay Hian Research has cherry-picked few constituents of the FTSE4GOOD Bursa Malaysia Index which focus both on fundamental growth and stock valuation.

Its top picks are Astro Malaysia Holdings Bhd, Axiata Group Bhd, CIMB Group Holdings Bhd, Inari Amertron Bhd, My E.G Services Bhd, Sunway Bhd and Yinson Holdings Bhd. – June 14, 2021

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