The U.S. Customs and Border Protection (CBP) announced on March 29 that it has ordered all U.S. ports of entry to seize disposable gloves from Top Glove Corp. after finding evidence that certain products have been manufactured with forced labor.
The announcement plunged the world’s largest glove maker Top Glove’s share price by 5% on Tuesday to the lowest level since March 3.
The CBP Office of Trade imposed the penalties against Malaysian Top Glove as it has found “sufficient information to believe that Top Glove uses forced labor in the production of disposable gloves.”, making it the second forced labor finding.
Previously in July 2020, the U.S. CBP has barred imports from two units of Top Glove’s on suspicion of labour abuses.
Therefore, the ban now extends “to all disposable gloves originating in Top Glove factories in Malaysia,”.
Sri Trang Gloves (Thailand) Public Company Limited (STGT) as of 11:55 local time in Thailand climbed ฿0.25/share or 0.62% to ฿40.50/share with a trading value 129 million baht.
It is expected the news could be positive toward STGT’s share price as the ban on Top Glove last year had pushed STGT higher, so it may happen similarly again.
Last year, KGI Securities published an analysis after the ban, saying that the issue could affect STGT’s earnings insignificantly as 90% -95% of sales were pre-order.