Hot Stocks Top Glove, Kossan rise as ringgit weakens

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Top Glove, Kossan rise as ringgit weakens

By Meena Lakshana / theedgemarkets.com   | September 29, 2015 : 12:19 PM MYT

KUALA LUMPUR (Sept 29): Top Glove Corp Bhd ([You must be registered and logged in to see this image.] Valuation: 1.10, Fundamental: 2.50) and Kossan Rubber Industries Bhd ( Valuation: 0.70, Fundamental: 2.10) gained as the weaker ringgit shored up interest in the shares of export-oriented rubber glove makers.
Top Glove rose as much as 21 sen or 3% to RM8.20 before reducing gains. At 11.45am, the stock was traded at RM8.01 with 704,300 shares done.
Kossan climbed as much as 12 sen or 2% to RM7.69. At 11.46am, the stock pared gains at RM7.63 with 660,700 shares done.
An analyst said “the interest garnered by rubber glove makers was driven largely by the weak ringgit”.
“It is definitely driven more on sentiment. For example, Top Glove purchases latex in ringgit but exports are in US dollars. So they stand to gain a lot more from the weak ringgit,” he said.
The ringgit weakened to a fresh level at 4.4792 against the US dollar today after Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said yesterday the central bank was not compelled to raise interest rates.
She said the current overnight policy rate at 3.25% was “accommodative” as it was supporting economic activities.
From a global viewpoint, the ringgit’s decline is due to low prices of commodities like crude oil, a major contributor to the Malaysian economy. The ringgit also depreciated amid a strengthening US dollar on the US Federal Reserve’s expected interest rate hike this year.
China’s slower economic growth outlook and investigations on state-owned 1Malaysia Development Bhd are also impacting the ringgit’s strength.
(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)