PETALING JAYA: A quick reopening of borders will further benefit recovery plays including the aviation, tourism and real estate investment trust (REITs) sectors besides also lifting general market sentiment, according to analysts.

       This will be a significant milestone in the normalisation process for markets.

       The recent proposal by the National Recovery Council to reopen Malaysia’s international borders as soon as March 1 without the need for compulsory quarantines comes sooner than expected, according to RHB Research, which sets the tone for its base case recovery scenario.

       Notably, the high rate of immunisation is helping to facilitate the reopening process, with 98% of adults having received two doses and 53% boosted. However, the proposal still requires an endorsement from the Cabinet.

       “The reopening of international borders will help to entrench the recovery process. Such positive news flow will help to lift market volatility, which should boost the environment for investors with a trading strategy.

       “However, the macroeconomic policy and regulatory risks we previously highlighted continue to evolve and lurk in the background, including the monetary tightening narrative that is still playing out,” RHB said in a note to clients.

       Immediate beneficiaries from a reopening of borders include the aviation sector, with Malaysia Airports Holdings Bhd expected to see higher passenger throughput.

       Nonetheless, RHB said it has a “neutral” rating on the sector as it opined that much of the anticipated pick-up in volume has already been priced in.

       Local tourism and hospitality players should also get a boost, particularly Genting Bhd and Genting Malaysia Bhd. it also noted that the long-awaited official opening of Genting SkyWorlds outdoor theme park earlier last week could not have been better timed.

       The expected pick-up in foot traffic will also benefit REITs such as KLCC Stapled Group and Pavilion REIT, which are more traditionally dependent on tourism.

       The healthcare sector may also see a resumption in medical tourism, while higher tourist arrivals and returning migrant workers also bode well for telecommunication companies.

       All in all, RHB has an “overweight” rating on the healthcare, gaming and technology sectors and has maintained a “neutral” stance on the transport, consumer, REITs and telecommunications sectors.

       “Market valuations are not especially compelling, given the lack of earnings growth. In line with our trading market investment theme, we believe that a buy-on-weakness and momentum trading strategy remains appropriate for now, but this also requires investors to remain disciplined enough to top-slice and sell into strength.

       “Value investors with a longer-term investment horizon should look to accumulate at lower levels and avoid chasing the rally,” it said.