Understanding the glove sector stock rally conundrum

The writing has been on the wall since late 2020 that glove counters would encounter softening market demand and selling prices after a meteoric rise in both demand and share price which commenced at the height of the COVID-19 pandemic (around mid-2020).

Given the forward-looking nature of the stock market, it must be pointed out that there are two contradicting-yet-valid views among investors that are impacting the direction of glove stocks in current times:

• The first view is that with the advent of COVID-19 vaccines, the pandemic will be over, prompting demand for gloves to fall (hence, earnings of glove makers will revert to pre-pandemic levels); and

• The second view is that glove demand will stay high with increasing awareness over hygiene and health (demand for gloves will stay healthy in the post-COVID-19 pandemic era) especially with the advent of the new Omicron variant.

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