by S BIRRUNTHA / pic by TMR FILE
THE prospect of the government opening borders to international travellers by December this year after allowing domestic travel to selected locations has fuelled interest in recovery cycle stocks.
Low-cost carrier AirAsia Group Bhd’s share price jumped 11.9% or 12 sen to RM1.13 yesterday as investor sentiment towards it improved, while tourist-dependent heavy-weights like Genting Malaysia Bhd and Genting Bhd also rose on expectations of improving business outlook.
The price jump in AirAsia shares has the legs to go higher as inbound and outbound restrictions are eased depending on the country’s Covid-19 vaccination rate.
Rakuten Trade Sdn Bhd head of equity sales Vincent Lau said sustained buying could see AirAsia’s shares hit RM1.20 or RM1.30 in the near term.He noted the stock price has been going up since the government announced the reopening of Langkawi Island to domestic travellers under a travel bubble plan from Sept 16.
The move to lift travel restrictions, Lau said, are in line with the reopening of borders by countries like Australia and Singapore after vaccination rates hit a certain threshold.
“I think this is what created the investor sentiment for such stocks. There’s a pent-up demand for travel and a lot of people are eyeing to travel locally and internationally at the end of this year.
“So, I believe AirAsia’s stock price will remain above RM1 and won’t fall below that anymore due to the massive demand for interstate and international travel moving forward,” he told The Malaysian Reserve.
Lau said cross-border travel will offer hopes of recovery for the struggling aviation sector that was devastated by the Covid-19 pandemic-induced movement restrictions worldwide.
AirAsia’s share price was at 65 sen on Sept 24, 2020.
Last week, Prime Minister (PM) Datuk Seri Ismail Sabri Yaakob announced Malaysians would be allowed to travel internationally by December or possibly sooner, depending on the country’s Covid-19 vaccination rate.
He said international travel is among benefits that would be rolled out once the vaccination rate passes 90% among the adult population.
The PM added that travellers would no longer need to apply for MyTravelPass once global travel is allowed to resume.
Ismail Sabri also announced the government will soon allow the resumption of interstate travel, as it is key to boosting the ailing domestic tourism sector.
He stressed that once the 90% vaccination rate is achieved, Malaysia would “open up almost completely”.
As of Oct 3, 87.6% of Malaysia’s adult population have been fully vaccinated against Covid-19, according to data from the Special Committee on Covid-19 Vaccine Supply.
AirAsia had previously stated that it expects a strong recovery in air traffic to all major domestic destinations and the resumption of international flights in the near future, complemented by strict health and safety protocols the airline has put in place.
AirAsia group president Bo Lingam had said the group is all geared up to fully restore its domestic and international services.
According to his recent statement, AirAsia had sold more than 260,000 seats for Langkawi alone in just over a week, which was a strong testament to the level of pent-up demand for domestic travel.
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