Analysts expect tourism, aviation, retail and consumer sectors to benefit from Malaysia-Singapore border reopening

TheEdge Fri, Mar 25, 2022 01:13pm - 2 years View Original


KUALA LUMPUR (March 25): Analysts and fund managers said on Friday (March 25) they see tourism, aviation, retail and consumer sectors benefiting as Malaysia and Singapore reopen their border on April 1.

Fortress Capital Asset Management chief executive officer (CEO) Thomas Yong said recovery sectors benefiting from tourist arrivals will be the major beneficiaries of the easing of border controls.

“Retail, consumer and even many broad-based industries will benefit from additional demand — whether directly or indirectly,” he told theedgemarkets.com.

Rakuten Trade Sdn Bhd head of research Kenny Yee also opined that market sentiment should improve amid the border reopening.

“We can expect tourism and consumer-related sectors to benefit,” he told theedgemarkets.com.

Meanwhile, Malacca Securities Sdn Bhd research head Loui Low said that the border reopening for the two countries should be slightly positive on the overall market.

“The positive impact is more towards recovery themes (aviation and tourism), and selective consumer stocks such as Berjaya Food Bhd, Bonia Corp Bhd and Padini Holdings Bhd,” he told theedgemarkets.com.

Areca Capital Sdn Bhd CEO Danny Wong, on the other hand, said he expects market sentiment to improve, which may also attract foreign and local investors.

“Obviously, the tourism and consumption-related, beverage and leisure sectors will benefit from the border reopening,” he said.

CGS-CIMB analyst Raymond Yap, who maintained an "overweight" stance on the aviation sector, said in a note that he believes the removal of quarantine requirements is key to reviving leisure and business travel.

However, he opined that travellers may still be cautious with the Covid-19 pandemic around.

According to him, business travellers have gotten used to holding meetings via the Zoom and Microsoft Teams applications, while some business travel may not recover quickly as companies seek to preserve travel cost savings.

He added that leisure travellers would also have to consider how being infected abroad may prevent them from flying home — and having to extend their overseas stay at their own cost.

“These are the downside risks to our 'overweight' call,” he said, adding that he prefers airports operators like Malaysia Airports Holdings Bhd (MAHB) over airline operators like Capital A Bhd as the latter are exposed to high fuel prices.

It was reported on Thursday that fully vaccinated travellers are allowed to cross the land border between Malaysia and Singapore from April 1 without the need to undertake a Covid-19 test both before departure and upon arrival. They are also not required to undergo any quarantine.

Before the pandemic, the border was one of the busiest land border crossings in the world, with around 400,000 travellers passing through daily.

Singapore was also Malaysia's biggest source of visitors before the pandemic, according to My Tourism data.

However, dragged by the pandemic, Singapore’s tourist arrivals to Malaysia plunged 84.8% year-on-year (y-o-y) to 1.55 million in 2020 from 10.16 million in 2019.

As for the first nine months of 2021, Singapore’s tourist arrivals to Malaysia slumped 99.9% y-o-y to 2,035 from 1.54 million.

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