- Newswires placed the newest bird flu virus (H10N8) under the spotlight yesterday following reports of a second case in China. The virus was linked to one death back in December 2013. Prior to that, it was not found in humans.

- The source of the H10N8 virus remains unknown but we understand that the deceased had visited a live poultry market days before he was unwell.

- While the earlier case may appear to be an outlier, the most recent one demonstrates that the H10N8 virus had continued to spread and may result in more human infections. This corresponds to an article in a medical journal, which stated that the virus may have features that will allow it to mutate (to aid human-to-human transmission or be resistant to drugs) and potentially spark a pandemic.

- Flu experts maintained that there is no cause for alarm presently although they agree that it is important to remain vigilant (Monitoring the spread is more difficult since the virus does not make the avian species ill).

- News of this deadly virus comes amidst the second wave of H7N9 human cases that began in October 2013 after a dormant period in the summer months. To date, more than 300 people have been infected and about a quarter of them have died. As a comparison, the H5N1 bird flu virus that emerged in 2003 took nearly 5 years to breach the same mark.

- Despite its highly infectious nature, the H7N9’s mortality rate is half of H5N1’s. As such, we opine that concerns over the surge in H7N9’s cases are unwarranted. WHO had assured that the rise was mostly due to seasonal factors. Additionally, Chinese authorities have stated that they have yet to identify any mutations in the virus that could cause widespread harm.

- We gather that both viruses have not developed a resistance to anti-viral drugs (e.g. Tamiflu) and there are no known human-to-human transmissions thus far.

- The increasing number of flu outbreaks (currently:- (1) bird flu: H7N9, H10N8 and a lesser known H6N1; as well as (2) swine flu: H1N1 - the dominant strain in US 2013/14 flu season) is generally positive for the rubber glove manufacturers. Should any manifest into a global pandemic, there could be an uptick in usage of examination gloves (~90% of total glove exports).

- All in all, we maintain our OVERWEIGHT stance on the rubber glove sector and keep our forecasts unchanged at this juncture. Our top picks, namely Kossan Rubber Industries (BUY, FV: RM5.05/share) and Top Glove Corp (BUY, FV: RM7.08/share), would be the main beneficiaries given that they have additional capacity to meet the sudden incremental demand. 

Source: AmeSecurities