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SINGAPORE (July 24): Thanks to meteoric gains in glove-maker stocks, Malaysia's equity-market capitalisation is close to surpassing that of its richer neighbour Singapore.

Malaysia's market value has surged 41% since a March low to hit US$379 billion as the coronavirus pandemic supercharged demand for medical gloves and shares of the manufacturers. That puts Malaysia about US$4 billion away from surpassing Singapore's market capitalisation for the first time in more than 16 years, according to data compiled by Bloomberg that only include actively traded primary listings.

"This is a reflection of the relative fortunes of the two economies and this divergence may continue for a while," said Nirgunan Tiruchelvam, head of consumer equity research at Tellimer who has been tracking the region's markets for decades. "Malaysia has integrated manufacturing industries like glove makers", while Singapore's economy is based on finance and property, he added.

The pandemic has sparked a reshuffle in Asia's largest stocks with the likes of technology and healthcare firms growing bigger than ever. While Singapore's market lost US$113 billion this year as it grapples with a slump in global trade, Malaysia's capitalisation bounced back due to huge gains in glove shares.

In fact, Top Glove Corp Bhd yesterday unseated Public Bank Bhd to become the second-most valuable stock on Malaysia's equity benchmark, after the former's stock surged more than 440%. Another glove producer, Supermax Corp Bhd, has leapt more than 1,100% this year.

The scorching rally in the sector has reversed the fortunes of what was last year's worst-performing stock market in Asia. The FBM KLCI index is the only benchmark stock gauge in Southeast Asia to have briefly erased losses made in 2020. The measure is little changed year to date.

The glove-maker rally has also fuelled fevered trading in the country's equity market, with the number of shares changing hands reaching a record high this week. Domestic buyers have dominated the market during the course of the year, with net outflows by foreign investors totalling US$4.2 billion.

Malaysia, whose gross domestic product was US$365 billion by end-2019, has been supported by the booming global demand for gloves and its bigger pool of domestic consumers. Meanwhile, Singapore's US$372 billion economy is heavily linked to trade and tourism, and it holds the grim distinction of having the one of the highest number of virus cases in Southeast Asia.