KUALA LUMPUR (March 30): Aviation stocks Capital A Bhd (formerly known as AirAsia Group Bhd) and Malaysia Airports Holdings Bhd (MAHB) gained, two days ahead of the much anticipated reopening of the country on April 1.

Capital A and MAHB had jumped by 10.21% and 6.52% to an intraday high of 75.5 sen and RM6.86, after opening at 68.5 sen and RM6.44 respectively on Wednesday (March 30).

At 4.30pm pre-market close, MAHB was the top gainer of the day despite paring some gains to trade at RM6.80 per share while Capital A was the second-most actively traded stock with 133.09 million shares changing hands.

This came after Prime Minister Datuk Seri Ismail Sabri announced earlier this month on March 8 that Malaysia will transition into an endemic phase effective April 1.

The move will see Malaysia reopening borders for fully-vaccinated international travellers from all countries without quarantine by requiring only pre-departure and on-arrival testing, with the latter to be performed within 24 hours of arrival.

Containment measures — such as business operating hours and reduced employee capacity at workplaces — which had been in place since March 18, 2020 at the onset of the pandemic will also be lifted on April 1.

Across the causeway, Singapore had also made a similar announcement on March 24 allowing fully-vaccinated travellers to enter the country without quarantine and booking specific Vaccinated Travel Lane (VTL) flights by requiring a test done two-days pre-departure in favour of a Vaccinated Travel Framework (VTF), similar to Malaysia’s arrangement.

Market observers have remarked that the border reopening will bring benefits to the overall market, specifically the aviation, consumer, retail and tourism sectors as Malaysia and Singapore will both reopen their borders on April 1.

CGS-CIMB analyst Raymond Yap, who is “overweight” on the aviation sector, wrote a note on March 25 saying that the removal of quarantine requirements will be the key to reviving leisure and business travels but he does not expect the travel recovery to be immediate.

His pick for the sector is airport operator MAHB, which is a direct volume play unaffected by high fuel prices such as Capital A.

MIDF Research said in a note on March 9 that while the decision to reopen borders is welcomed, a more meaningful recovery in international air travel across the region would only take place in the second half of 2022, pending several other key ASEAN countries to follow suit.

MIDF maintained its “neutral” call on the sector by noting that there is a possibility that the public might still be sceptical with the idea of travelling abroad in the midst of the Omicron wave as safety remains of paramount importance, combined with the temporarily pricier ticket fares with the reintroduction of fuel surcharges by certain airlines in view of the rising jet fuel prices.

Meanwhile, Capital A’s aviation arm AirAsia Aviation Group Ltd (AirAsia) released a statement on Wednesday saying it planned to reinstate five more routes between Malaysia and Singapore from April 16 onwards, in line with the Singapore government’s VTF.

AirAsia added that it will also be increasing its Singapore-Kuala Lumpur daily frequency from one to four times while resuming flights between Singapore and the following destinations: Kuching, Miri, Langkawi, Ipoh and Kota Kinabalu.

At their current share prices, Capital A is valued at RM3.12 billion while MAHB is valued at RM11.3 billion.