Travel, hotel stocks hit by 4th wave fears


CONCERNS over a potential fourth wave of Covid-19 outbreaks in Malaysia have seen the bulk of hospitality-related stocks retreating to levels hit in January when the Movement Control Order 2.0 was reintroduced.

The past couple of weeks have seen stocks in tourism, aviation and gaming sectors erase billions of ringgit in gains achieved in March as renewed uncertainties over the country’s economic recovery rocked investor optimism.

Malacca Securities Sdn Bhd head of research Loui Low said the recent rise in new cases and uneasiness around a slower than expected distribution of Covid-19 vaccines have dampened investors’ risk appetite towards recovery-themed stocks.

“On the overall trend, I think stocks like AirAsia Group Bhd will take on a more severe hit compared to hotel stocks. I believe the latter can still count on local tourists to beef up their short-term earnings though the figure is unlikely to hit pre-pandemic levels reached in 2019,” he told The Malaysian Reserve.

Heavyweights Genting Malaysia Bhd and Berjaya Corp Bhd have fallen by 6% to RM2.92 and 13.6% to 38 sen respectively, over the last two weeks, wiping off a total of RM1.37 billion from their market valuation.

Shangri-La Hotels (M) Bhd also saw further declines this month, extending its fall over a 52-week period by 17.6% to RM3.70 as of last Friday.

Avillion Bhd’s shares have also declined by 29% since April 1 to 8.5 sen last Friday, while Advance Synergy Bhd — which operates the Holiday Villa Hotels and Resorts chain — ended relatively flat at 15.5 sen.

Pan Malaysia Holdings Bhd, which runs the Corus Paradise Resort in Port Dickson, Negri Sembilan, was down by 9% to close at 10sen.

Airline stocks also fell further last Friday with AirAsia seeing a 8.3% or 8.5 sen drop in its share price to 93.5 sen over the past two weeks, while shares of its long-haul arm AirAsia X Bhd ended flat at nine sen.

Shares of bus service operators also took minor hits, with Perak Transit Bhd’s shares posting a one sen drop and Konsortium Transnasional Bhd ending flat.

“I think there are no other reasons apart from the spike in Covid-19 cases and that vaccination rollouts seeming to have some hiccups, which could also be a downside risk to these counters.

“Market players will definitely look into earnings. If there are no earnings from these stocks down the road for the next two quarters or so, they may not be interested to get their exposure inside these counters,” Low said.