(March 9): CGS-CIMB Research said the news of border reopening is not a surprise as the government had indicated its intention to do so over the past few weeks.

“We are positive on this news as this will spur economic activities and boost the tourism industry. The decision to no longer limit operation hours for businesses will also help to generate higher sales,” CGS-CIMB Research said.

Sectors that will benefit from higher foreign tourist arrivals are hotels and retail (via REIT sector), consumer, gaming, transport, brewery and healthcare.

“Stocks that we like under this thematic play are Malaysia Airports Holdings Bhd (MAHB), Genting Malaysia Bhd, Genting Bhd, Carlsberg Brewery Bhd, Heineken Malaysia Bhd, Bonia Corp Bhd, IGB REIT and IHH Healthcare Bhd,” the research house said in a March 9 note.

However, it cautioned that this positive news is partially offset by concerns over the ongoing Russia-Ukraine war, rising inflation, labour shortage concerns and political uncertainty.

“We maintain our end-2022 FBM KLCI target of 1,622 points and our top three picks: Hong Leong Bank Bhd, Petronas Chemicals Group Bhd and MAHB.”

The local benchmark index rebounded 15.46 points or 1% to close at 1,562.33 points on Wednesday (March 9), after three days of heavy sell-off in response to the worsening Russia-Ukraine conflicts.

Consumer stocks like DKSH Bhd, MAHB, Fraser & Neave Holdings Bhd were among the top gainers with their share prices gaining 34 sen, 25 sen and 20 sen to RM4.65, RM6.31 and RM21.28, respectively.

Meanwhile, Citi expects Malaysia’s 2022 gross domestic product (GDP) to grow 6.5%, underpinned by optimism with the country’s imminent reopening of borders. The forecast also incorporates additional boost to capex from reconstruction after the floods in mid-December, adding to earlier drivers from supply chain diversification and cyclical capacity tightness.

Though dampened by floods in the Klang Valley in mid-December, Malaysia’s 4Q21 GDP rose a stronger than expected 3.6% year-on-year on reopening, which should continue into 2022 despite Omicron uncertainties and external demand headwinds.

“While Omicron delays reopening momentum, it does not derail it, both domestically and internationally. Despite the recent surge in daily infections since the start of 2022, the proportion of severe cases have declined drastically, with ICU capacity utilization rates still low,” said Citi economist Wei Zheng Kit.

On the global front, Citi noted that the economic recovery and bull market are maturing, with moderate growth expected ahead. Less inflationary pressure is expected in the coming year, albeit somewhat higher inflation over the next 10 years when compared to the last decade.