Farah Adilla
KUALA LUMPUR: Supermax Corp Bhd is among Bursa Malaysia's top losers in brisk trade yesterday after the United States barred imports from the glove maker over alleged forced labour practices.
The stock plunged as much as 25 sen or more than 10 per cent to hit a low of RM2.00 in early trade, before settling 8.89 per cent lower at RM2.05.
It was the third most active counter with 78.34 million units changing hands.
Supermax is the fourth Malaysian firm to face the US Customs and Border Protection's (CBP) ban in the past 15 months.
Other glove counters also suffered losses with Top Glove Corp Bhd dropping 13 sen or 4.55 per cent to RM2.73 and Careplus Group Bhd shedding eight sen or 7.35 per cent to RM1.01.
The losses dragged the healthcare index 26.77 points or 1.06 per cent lower to close at 2,493.01 points.
Analysts said the ban was expected to have a significant impact on Supermax's earnings.
"The US historically contributes around 20 per cent to 30 per cent of its earnings. So, we expect a significant impact on its earnings, considering gloves command premium pricing in the US compared to other countries," KAF Research analyst Nabil Zainoodin was quoted by The Edge.
According to him, the effect was also dependent on how long it takes for Supermax to resolve the issue.
The CBP reportedly on Wednesday issued a withhold release order to prohibit imports from Supermax's wholly-owned subsidiaries from entering the US based on "reasonable information of forced labour in the group's manufacturing operations".
CBP said with 10 of the 11 forced labour indicators identified during the course of its investigation, it had "ample evidence" to conclude that Supermax and its subsidiaries produce gloves in violation of the US trade law.
"With this Withhold Release Order, the Biden-Harris Administration continues to make clear that products made in whole or in part by forced labor will not be allowed into the United States.
"The Department of Homeland Security will continue to set an international standard for the elimination of the deplorable practice of forced labor. We will remove it from American supply chains," Secretary of Homeland Security Alejandro N Mayorkas reportedly said in a CBP statement.
In July 2020, Top Glove faced a similar ban by the CBP over forced labour allegations.
Top Glove, the world's leading glove manufacturer, has been permitted to resume exporting and selling gloves to the US effective September 10, following a revision to the CBP findings.
Another Malaysian glove manufacturer, WRP Asia Pacific, was also put on the CBP withhold release order in September 2019 after charges that its gloves were produced through forced labour.
The ban was lifted in March 2020 based on information obtained by CBP showing that the company was no longer producing its rubber gloves under forced labour conditions.
