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Malaysia lifts travel curbs for the fully vaxxed

  • Malaysia will allow interstate and overseas travel for fully vaccinated Malaysians from 11 Oct. However, Malaysia’s borders are still closed to foreign tourists.
  • This is positive as the lifting of the interstate travel ban, which has been in place since 13 Jan, will boost economic activities and corporate earnings in 4Q21.
  • Sectors that will benefit are airports, airlines, casino, brewers, REIT and retailers.
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Malaysia lifts interstate and international travel restrictions

● Malaysia announced that it will allow interstate and overseas travel from 11 Oct 2021 for fully vaccinated individuals. All local tourism will also be allowed. Previously, police permits were required to travel across states. In his statement, the Prime Minister (PM) reminded citizens that those who wished to cross states perform self-testing before travelling to ensure he/she was negative. The PM added that 90% of Malaysia’s adult population had been fully vaccinated as at 10 Oct.

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● He also announced that those who were fully vaccinated will be allowed to travel overseas without applying for My Travel Pass starting today (11 Oct 2021). Those returning to Malaysia have to perform swab tests 3 days prior to the return and another swab test upon arriving in Malaysia. A 14-day home quarantine is also required for Malaysians returning to the country. However, Malaysia’s borders are still closed to foreign tourists.

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Positive but not a major surprise

● The announcement to relax restrictions is not a surprise as the PM has hinted that the country will allow travel once 90% of the adult population have been fully vaccinated. Malaysia achieved this on 10 Oct 2021. The timing of the relaxation of the interstate travel ban is also broadly in line with the national recovery plan and our expectations.

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● Malaysia’s new Covid-19 cases declined significantly from its peak of 24,599 cases on 26 Aug to 7,373 as at 10 Oct 2021. Only 133 out of the new cases yesterday were patients in categories 3 to 5 while the nationwide infectivity rate was 0.86. The PM also announced that the national vaccination programme has succeeded in lowering Covid- 19 patient admission rates to the ICU by 83% and death rates by 88%.

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● We are positive on the news as the lifting of the interstate travel ban, which has been in place since 13 Jan 2021, will help spur economic and business activities. We expect the government to ease international border restrictions over the next few months. Sectors that will benefit from the reopening of interstate travel are those in the tourism industry, i.e. airlines, airports and hotel players (top pick: Malaysia Airports), casino operators driven by increased visitors to Genting Highlands (top pick: Genting Malaysia, Genting), REIT players driven by improvement in hotel occupancy rates and footfall in malls (top pick: IGB Reit) and brewers benefitting from a pick-up in tourism activities (top picks: Carlsberg and Heineken) as well as retail players (top picks: Bonia, 7-Eleven). We maintain our view that recovery stocks are likely to gain interest in 4Q and the market could re-rate to our KLCI target of 1,629 pts (based on 14.5x P/E for CY22) on the back of expectations of corporate earnings recovery in 4Q21.