US-China tariff rollback likely to delay glove-purchasing decisions
Maybank IB Research has downgraded the gloves sector to a “negative” as the risk outweighs potential returns.
The latest US-China tariff rollback may not favour Malaysian glove makers as it could delay purchasing decisions due to ongoing uncertainty, say analysts.
The United States and China had reached an agreement to temporarily reduce reciprocal tariffs for 90 days, whereby the United States will cut the additional tariffs imposed on China imports last month from 145% to 30%, while China will lower its tariffs on US goods from 125% to 10%
According to Maybank Investment Bank (Maybank IB) Research, a reversion to the previous tariff schedule on China gloves remains possible depending on the outcome of the ongoing negotiations.
New capacity from China glove makers in South-East Asia, expected from 2026, posed growing supply risks that could pressure volume and average selling price (ASP), said the research house.
“In our view, these risks outweigh potential returns,” the research house added.
The tariff on China glove makers remained unclear.
Maybank IB Research said industry sources suggested an 80% rate, combining the 30% reciprocal tariff (for 90 days) and earlier Biden-imposed tariffs.
“However, this is unconfirmed, as 30% may not apply to goods with pre-existing high tariffs.
“The effective rate could instead be the original Biden-imposed rate of 50%,” it said, adding that the US tariffs on Malaysia gloves are at 10% from April 9 to July 8, 2025, followed by 24% thereafter.
Maybank IB Research has downgraded the gloves sector to a “negative” as the risk outweighs potential returns.
The research house has cut the target price (TP) for Hartalega Holdings Bhd to RM1.88 a share, Top Glove Corp Bhd to 73 sen and Kossan Rubber Industries Bhd to RM1.60 respectively.
Maybank IB Research has also downgraded these stocks to a “sell” call from “hold” previously.
Meanwhile, Hong Leong Investment Bank (HLIB) Research viewed the latest development negatively, as it could weaken the prevailing narrative of a potential demand shift from vinyl to nitrile rubber gloves, a trend which will help to absorb excess supply from China.
“Given the rising uncertainties surrounding the supply-demand equilibrium heading into 2026, we downgrade the gloves sector to neutral from overweight, with Kossan being our sole ‘buy’ with a TP of RM2.30 a share.
“We continue to favour Kossan for its differentiated strategies in product customisation and automation, as well as its robust balance sheet,” it said in a note to clients yesterday.
On a positive note, HLIB Research said there is potential for a gradual demand shift away from vinyl gloves to nitrile rubber gloves by US buyers – mainly benefiting Malaysian producers – should the ongoing 90-day tariff negotiations between the United States and China conclude unfavourably.
The research house maintained a “hold” call on Hartalega following the group’s fourth quarter of financial year 2025 results with an unchanged TP of RM2.16 a share.
It reiterated a “buy” on Kossan, but with a lower TP of RM2.30 a share from RM2.81 previously.
“We continue to favour Kossan for its differentiated strategies in product customisation and automation, coupled with its robust balance sheet; has a net cash of RM1.6bil, the highest among peers under our coverage,” it noted.
For Top Glove, HLIB Research said “post positive share price reaction following its last upgrade on April 3, we downgraded the stock to a ‘sell’ with a lower TP of 76 sen from 91 sen previously.”
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