Coronavirus outbreak boosts rubber gloves and surgical shares
Traders in Asia have sought ways to cash in on epidemic of deadly virus
Shares in Asian businesses that make rubber gloves and other surgical equipment have been boosted by the outbreak of a deadly coronavirus in China, as traders look to cash in on the epidemic.
The disease has killed nine and infected 440 people in China, while cases have been reported in the US, Japan, South Korea, Macau, Taiwan and Thailand. News of the first cases of human-to-human transmission of the pathogens has hit equity markets this week, with fears mounting as more than a 100m Chinese prepare to travel for the Lunar New Year holiday.
But the outbreak has also seen investors pile into stocks such as Malaysia’s Top Glove, which manufactures more than 70bn pairs of rubber surgical gloves a year. The company’s Kuala Lumpur-listed stock has climbed almost 14 per cent in the past two days, boosting its market capitalisation by $370m.
The company’s “products act as inexpensive protective barriers, which could see a surge in sales should the outbreak continue to deteriorate at a global scale leading to a pandemic,” said Citi analysts led by Megat Fais.
Kossan Rubber Industries and Supermax Corp, two other Malaysian companies that make latex gloves, jumped more than 6 per cent and 8 per cent on Wednesday, respectively.
The outbreak of the coronavirus in the Chinese city of Wuhan has drawn comparisons with the 2003 Sars crisis, which killed 800 people after officials initially attempted to cover up the scope and severity of the epidemic.
Investors have responded to the rapid increase in known infections by buying shares in companies that could benefit from higher demand for medical products. Shanghai-listed Zhende Medical, which makes medical supplies, has risen by more than 33 per cent this week.
Kinger Lau, chief China equities strategist at Goldman Sachs, pointed out that the composition of the country’s stock market was more robust than during the 2003 Sars outbreak. A much larger component of the index is now made up of companies involved in sectors such as healthcare, Mr Lau added.
The fact that so much Chinese spending is now done online could help mitigate the effect from shoppers staying home out of fear of catching the virus, strategists have said.
The Hong Kong-listed shares of Chinese ecommerce group Alibaba climbed 1.8 per cent on Wednesday, versus a 1.2 per cent gain for the Hang Seng.