Malaysia’s R-naught has stayed above 1.0 for the most of April, suggesting a possible heightened case resurgence and with vaccine deliveries back loaded to 2H21, analysts are more cautious on Malaysia’s economic performance in the near term. — Bernama photo
KUCHING: Malaysia’s R-naught has stayed above 1.0 for the most of April, suggesting a possible heightened case resurgence and with vaccine deliveries back loaded to the second half of 2021 (2H21), analysts are more cautious on Malaysia’s economic performance in the near term.
In a report, the research team at Hong Leong Investment Bank Bhd (HLIB Research) noted that domestic daily Covid-19 cases from the ‘third wave’ peaked in late-January (with circa 5,700 cases) and subsequently declined by as much as 84 per cent to below 1,000 by late-March.
However, cases have been steadily rising since then with daily numbers now exceeding the 2,000 mark consecutively since April 15 and notable contributors to the resurgence are Sarawak, Kelantan and Klang Valley.
“While we maintain our end-2021 KLCI target at 1,740 (17.3-folds five-year mean PE on 2021 earnings per share), we are cognizant that near term sentiment may take a hit following the case resurgence,” HLIB Research opined.
It also pointed out that based on the timeline disclosed by JKJAV, vaccine deliveries are expected to only gain traction from June onwards, implying that relying on vaccines alone may not be sufficient to arrest near term case resurgence.
As of April 21, Malaysia has administered 1.2 million vaccine doses, which implies that 2.3 per cent of Malaysians have received at least one dose compared to its herd immunity target of 80 per cent by end-2021.
Vaccine registrations on MySejahtera have been slowly but steadily climbing and now stands at 9.1 million or 37.7 per cent of population but like most nations, the key challenge on this front remains addressing the notorious anti-vaxxer sentiment.
Sectorial wise, with cases on the rise, the research team believe that it is unlikely that interstate travel would be allowed anytime soon, negatively impacting aviation and tourism (Genting and REITs with hotels).
“The resurgence may also discourage people from leaving home to reduce contagion risk, potentially posing a negative for brewers, consumer staples, healthcare (hospitals), property, retail and REITs (mall based).
“This could be positive for logistics, specifically for courier given a greater substitution to online shopping,” it said.
On the bright side, it reckoned that sentiment would be positive for gloves, but this is due more to the resurgence in global cases rather than domestic. Despite its concerns on the resurgence of cases, HLIB Research retained its view that 2021 will still be a recovery year, particularly in the 2H when vaccine deliveries pick up significantly.
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