Foreign investors are using the selloff in Malaysian glove makers to return to last year’s stock market stars.

Top Glove Corp. and Supermax Corp. are among the top three stocks on the buy list of foreigners this year through April 2, attracting net inflows of RM1.4 billion (US$340 million), according to CGS CIMB Research. Global funds bought a net RM189.9 million of Press Metal Aluminium Holdings Bhd, the brokerage said in a report.

Shares of glove makers were one of Asia’s hottest pandemic trades for much of 2020 before the rollout of vaccines around the world weakened their appeal and became targets of short sellers. The three biggest glove stocks, including Top Glove, are the worst performers in Malaysia’s benchmark equity gauge this year.

“There is still significant value to be derived from Malaysian glove players which command 65-68 percent of the global market share,” Kenanga Investment Bank Bhd said in a report. Glove stocks are trading at “unwarranted” 6 times to 10 times 2022 price-earnings ratios and offer dividend yields of 6-8 percent, it said.

Top Glove rose 2.9 percent and Supermax climbed 2.3 percent at the close on Wednesday. They have slid more than 50 percent from their October peaks, dragging valuations to rock bottom levels. Top Glove trades at about six times forward 12-month earnings, versus its one-year mean of 15.3 times. Supermax is priced at 3.8 times compared with its average of 15 times, Bloomberg-compiled data show.

Pressure on Top Glove deepened late last month when the U.S. Customs and Border Protection ordered personnel at U.S. ports of entry to seize its gloves made in Malaysia over allegations of forced labour.

That fuelled concerns over its environmental, social and governance practices that have come under greater scrutiny in industries including palm oil. In contrast, Press Metal’s stock is the top gainers on the main index as its focus on ESG has made it a favourite among investors.

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