WITH deaths from the Wuhan coronavirus tripling over the weekend and confirmed cases doubling, investors continued to pile in on medical firms and glove makers, with many making considerable gains in Tuesday' s high volume session.

 

Of the 2.49 billion securities traded on the Singapore bourse on Tuesday, 21 per cent of the volume was attributable to a trio of usually thinly traded medical penny plays: Medtecs International, AsiaMedic Limited and Healthway Medical.

 

Shares in Medtecs, a manufacturer and distributor of medical consumables, advanced 65.4 per cent or 6.8 Singapore cents to 17.2 cents - an all-time high. The 325.2 million shares changing hands was the most on the Singapore Exchange (SGX).

 

AsiaMedic added 0.2 Singapore cent or 13.3 per cent to 1.7 cents, while Healthway was up 0.7 Singapore cent or 17.9 per cent to 4.6 cents.

 

Among other medical listings, Thomson Medical shares were 0.1 Singapore cent or 1.6 per cent higher at 6.3 cents and IHH Healthcare, which has eight ParkwayMedical health centres in China, added S$0.03 or 1.6 per cent to S$1.94.

 

Parkway Life Reit, which has a portfolio of 53 medical properties worth S$1.96 billion, was one of three gainers among local real estate investment trusts (Reits). It gained S$0.12 or 3.5 per cent at S$3.60.

 

Given investor worries of a contagion, observers were not surprised by the price actions in such listings.

 

One trader told The Business Times: " The fear is very much real, especially since the outbreak occurred around the Chinese New Year, which is considered a peak period of travel in China. With the situation likely to get worse before it improves, such listings could see prices sustained in the near term."

 

The recent virus outbreak has also brought increased attention to Malaysian glove makers listed in Singapore.

 

UG Healthcare leapt 9.5 Singapore cents or 61.3 per cent to S$0.25.

 

Top Glove, one of the largest manufacturers of rubber gloves globally, surged S$0.45 or 23.7 per cent to S$2.35.

 

Riverstone Holdings, where the manufacture of healthcare gloves accounts for about 70 per cent of revenue, jumped S$0.20 or 19.6 per cent to S$1.22.

 

Just prior to Chinese New Year Eve on Jan 24, Citi Research upgraded its call on Top Glove to " buy" , with the firm a beneficiary of a potential pandemic outbreak following the sharp escalation of the Wuhan virus.

 

" Top Glove, the largest by capacity, also has the widest client exposure (more than 2,000 customers), (and ) thus stands to benefit the most should this outbreak become a global emergency," Citi Research analyst Megat Fais said.

 

He noted that revenue for Top Glove more than doubled during the Sars and avian flu outbreaks. Revenue grew 36 per cent during the swine flu outbreak and increased 13 per cent during the Middle East respiratory syndrome (Mers) epidemic.

 

With Medtec' s shares gaining 4.5 times since the start of the year and Top Glove adding 50 per cent, KGI Securities head of Singapore research Joel Ng noted that the gains, which translate into large increases in market capitalisation of these firms, do not apppear to be justified.

 

He said: " For a number of these companies, share prices have run ahead of company fundamentals but given sentiment driving increased attention on these firms, we could see (them) maintain their elevated valuations in the near team."