• Malaysia will be transitioning into the endemic phase and reopening the borders should boost the economic activities going forward.
   
• Global themes include (i) tension between Ukraine-Russia, (ii) inflationary pressure, (iii) Fed’s monetary policies, and (iv) recession fears, while domestic catalysts include (i) GE15, (ii) 5G rollout, and (iii) commodity supercycle.

• Under this environment, we like recovery-themed stocks and GE15 catalysts may boost trading interest within the construction sector. Besides, we opine the commodity-linked sector will remain strong in 2Q22.

Covid-19 - endemic phase

• “Transition to Endemic” phase from April onwards and Malaysia has relaxed most of the Covid-19 measures and SOPs for this stage. Also, we will be opening up the travel borders to international tourist in April, allowing travellers who are fully vaccinated against Covid-19 to enter the country without quarantine.

• Covid-19 indicators are declining. The daily statistics for death, ICU, ventilated, hospital admissions are falling, suggesting that the Covid-19 virus is well contained. Meanwhile, we have achieved near to 80% for 2 doses of Covid-19 vaccine, while about 48% of the total population has taken booster jab.
   
• National Recovery Plan… All the states are currently under Phase 4 of NRP, except for Kelantan and Sarawak. Hence, we believe most of the business activities will return to normalcy and very unlikely we will undergo another round of MCO.

Economic review and outlook

• Globally, manufacturing PMI(s) are in expansionary territory. Since the slowdown during the start of the Covid-19 pandemic due to worldwide lockdown, manufacturing sector has been moving into expansionary territory. Thus, we believe the recovery tone could be expected moving forward.

Source: Mplus Research - 1 Apr 2022