The United States imposing higher tariffs on China has caused a surge in Malaysian glove stocks.
(Kuala Lumpur News, 17th) The United States has imposed higher tariffs on Chinese gloves than expected, which has prompted a sharp increase in local glove stocks, with the most favored by the market. $HARTA (5168.MY)$ Hartalega (HARTA, 5168, main board healthcare stock) even hit the limit up!
In a research report, Xingye Investment Bank pointed out that the United States has decided to significantly increase tariffs on Chinese goods, with the tariff rate for gloves set to be raised to 50% from 2025 and further increased to 100% in 2026.
Analysts believe that the punitive measures taken by the United States against China will have a significant spillover effect for Malaysian glove manufacturers, and the average selling price of Chinese gloves may surpass Malaysia as early as next year.
Previously, the proposed import tariff on Chinese gloves by the USA is set to be increased to 25% in 2026, which is significantly lower than the current adjustment level.
The analyst continued to say that this could likely lead to an average selling price of Chinese gloves, skyrocketing from the current $17 to $25.50 in 2025, and even rising to $34 in 2026.
Therefore, this will bring price advantages to Malaysian glove manufacturers, as the average selling price of the industry is only between $20 and $21."
Therefore, analysts do not rule out the possibility that Chinese operators may reconsider their plans to expand in overseas markets to avoid high tariffs.
"However, we believe that this expansion may cause Chinese operators to lose their cost competitiveness, as they cannot achieve cost savings overseas through coal production."
With the USA determining a substantial increase in Chinese commodity tariffs, it implies that the price gap between Malaysian and Chinese gloves will narrow, leading to multiple brokerages raising ratings for glove manufacturers.
Feng Long investment banking research analyst said that due to the recent weakness in the industry's stock prices and the US tariffs on China, it is expected that the risk-return ratio will become favorable, and the Malaysian glove industry may also regain market favor, and the sector rating will be upgraded from 'neutral' to 'increased holdings'.'
In a research report, Xingye Investment Bank pointed out that the United States has decided to significantly increase tariffs on Chinese goods, with the tariff rate for gloves set to be raised to 50% from 2025 and further increased to 100% in 2026.
Analysts believe that the punitive measures taken by the United States against China will have a significant spillover effect for Malaysian glove manufacturers, and the average selling price of Chinese gloves may surpass Malaysia as early as next year.
Previously, the proposed import tariff on Chinese gloves by the USA is set to be increased to 25% in 2026, which is significantly lower than the current adjustment level.
The analyst continued to say that this could likely lead to an average selling price of Chinese gloves, skyrocketing from the current $17 to $25.50 in 2025, and even rising to $34 in 2026.
Therefore, this will bring price advantages to Malaysian glove manufacturers, as the average selling price of the industry is only between $20 and $21."
Therefore, analysts do not rule out the possibility that Chinese operators may reconsider their plans to expand in overseas markets to avoid high tariffs.
"However, we believe that this expansion may cause Chinese operators to lose their cost competitiveness, as they cannot achieve cost savings overseas through coal production."
With the USA determining a substantial increase in Chinese commodity tariffs, it implies that the price gap between Malaysian and Chinese gloves will narrow, leading to multiple brokerages raising ratings for glove manufacturers.
Feng Long investment banking research analyst said that due to the recent weakness in the industry's stock prices and the US tariffs on China, it is expected that the risk-return ratio will become favorable, and the Malaysian glove industry may also regain market favor, and the sector rating will be upgraded from 'neutral' to 'increased holdings'.'
Regain market share?
In addition, according to the analyst from Dahua Jishi Research, the adjustment of tariffs has restored confidence in investment in the Malaysian glove industry.
Although the industry demand has slowed down, overall recovery has accelerated, and it is believed that Malaysian glove manufacturers have the opportunity to regain market share occupied by Chinese industry players.
However, according to research by Fenglong Investment Bank, this may not help Malaysian players to capture more market share in the global market.
Because Chinese industry players may shift the market focus from the USA to Europe and Asia, and the possible change under a balanced market would only affect the customer cohort.
Regardless, the increase in tariffs from the current 7.5% to 50% is a significant increase of 42.5 percentage points.
We believe that the 3.5-month window period before 2025 will stimulate glove sales and average selling prices in the fourth quarter of 2024 and the first quarter of 2025.
In addition, the glove tariff rate imposed by the USA on China will further increase to 100% in 2026, which is 92.5 percentage points higher than the current level.
According to Fenglong Investment Bank's research estimation, the supply and demand of the glove market will reach equilibrium in 2025, with a factory utilization rate of approximately 85% for global players, and the industry situation will continue to improve in 2026.
Although the industry demand has slowed down, overall recovery has accelerated, and it is believed that Malaysian glove manufacturers have the opportunity to regain market share occupied by Chinese industry players.
However, according to research by Fenglong Investment Bank, this may not help Malaysian players to capture more market share in the global market.
Because Chinese industry players may shift the market focus from the USA to Europe and Asia, and the possible change under a balanced market would only affect the customer cohort.
Regardless, the increase in tariffs from the current 7.5% to 50% is a significant increase of 42.5 percentage points.
We believe that the 3.5-month window period before 2025 will stimulate glove sales and average selling prices in the fourth quarter of 2024 and the first quarter of 2025.
In addition, the glove tariff rate imposed by the USA on China will further increase to 100% in 2026, which is 92.5 percentage points higher than the current level.
According to Fenglong Investment Bank's research estimation, the supply and demand of the glove market will reach equilibrium in 2025, with a factory utilization rate of approximately 85% for global players, and the industry situation will continue to improve in 2026.
Glove stocks are excited by the news.
Due to the overall situation being favorable for the Malaysian glove sector, glove stocks rose across the board on Tuesday, with active trading sentiment.
Among them, Hartalega's rise is the most eye-catching, opening at the limit up, a significant increase of 29.75% or 72 sen, to 3.14 ringgit.
In addition, $KOSSAN (7153.MY)$ Kossan, a high-yield glove industry (7153, main board healthcare stock), also performed well, rising 36 sen or 19.67% to 2.19 ringgit in the morning session.
Following closely behind is $TOPGLOV (7113.MY)$ Top Glove (TOPGLOV, 7113, Main Board Healthcare Stock) rose sharply in early trading, up 24.59% or 22.5 sen to 1.11 ringgit, and it is also the hottest stock in the market.
$SUPERMX (7106.MY)$ Supermax (SUPERMX, 7106, main board health stock) reported a price of 92 cents, up 13 cents or 16.46% from last Friday's closing price of 79 cents.
In general, glove stocks dominate the top five on the rising and hot lists, driving a 9.63% surge in the healthcare sector index.
Among them, Hartalega's rise is the most eye-catching, opening at the limit up, a significant increase of 29.75% or 72 sen, to 3.14 ringgit.
In addition, $KOSSAN (7153.MY)$ Kossan, a high-yield glove industry (7153, main board healthcare stock), also performed well, rising 36 sen or 19.67% to 2.19 ringgit in the morning session.
Following closely behind is $TOPGLOV (7113.MY)$ Top Glove (TOPGLOV, 7113, Main Board Healthcare Stock) rose sharply in early trading, up 24.59% or 22.5 sen to 1.11 ringgit, and it is also the hottest stock in the market.
$SUPERMX (7106.MY)$ Supermax (SUPERMX, 7106, main board health stock) reported a price of 92 cents, up 13 cents or 16.46% from last Friday's closing price of 79 cents.
In general, glove stocks dominate the top five on the rising and hot lists, driving a 9.63% surge in the healthcare sector index.
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