Glove makers mixed reaction to US Ebola scare; Top Glove, Supermax buck KLCI decline

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KUALA LUMPUR (Oct 2): Rubber glove manufacturers Top Glove Corp Bhd and Supermax Corp Bhd rose bucking the broader market's decline in what may seem to be a reaction to the first case of Ebola diagnosed in the United States (US).

Reuters reported that Asian stocks fell on Thursday, dragged lower after the first case of Ebola diagnosed in the United States spooked Wall Street overnight, while a bout of risk aversion pushed down yields and put the dollar's recent rally on pause.

In Malaysia, Top Glove rose one sen or 0.2% to RM4.92 at 10.44am while Supermax was up three sen, or 1.35% to RM2.25.

For comparison, the FBM KLCI fell 2.71 points or 0.2% to 1,842.61. The KLCI had earlier dropped to a low of 1839.13 points, so far today.

AmResearch Sdn Bhd maintained its "hold" recommendation on Top Glove’s shares in its report today. The recommendation came with an unchanged fair value of RM4.80.

“We expect Top Glove’s FY14F-FY16F earnings growth to be subdued as demand for its products remains lacklustre and as margin pressure weighs,” said AmResearch. Top Glove's financial year ends on August 31.

Meanwhile, other rubber glove producers like Kossan Rubber Industries Bhd was, however, flat at RM4.50 at 11.02am while Hartalega Holdings Bhd was down three sen or 0.42% to RM7.08

According to Reuters, US stocks dropped more than 1 percent on Wednesday as the Ebola news scared investors, economic data pointed to uneven growth, and the Russell 2000 index of small-cap shares entered correction territory.

Morgan Stanley Capital International (MSCI)'s broadest index of Asia-Pacific shares outside Japan dipped 0.2 percent, and Tokyo's Nikkei shed 1.3 percent.