Rubber glove stocks may rise further

Over the past few days, we can see selective rubber glove stocks rising. The best performer is Supermx. The reason for the rise is the drop in the price of rubber latex as well as the strengthening of the USD.

From Chart 1 below, we can see that rubber prices have broken its uptrend line last week. This means that rubber glove producers could see a decline in its cost of sales & a corollary increase in operating profit. In addition, USD which broke above its downtrend line in early September would lead to favorable forex gain as rubber glove producers sell in USD.

These two favorable factors could lead to a recovery in rubber glove stocks. For those looking to buy into these stocks, this may be a good time to do so.


Chart 1: TOCOM RSS3 price chart as at Sept 30, 2011 (Source: Rubbernet)



Chart 2: USD index's weekly chart as at September 30, 2011 (Source: Stockcharts)