• Heightened volatility was experienced due to (i) rising inflationary pressure, (ii) tension between Ukraine-Russia, (iii) hawkish Fed’s tone and (iv) recession fears.

• Given Malaysia has transitioned into endemic phase, it might benefit consumer & services sector with the reopening of business activities and upliftment of borders. We expect firm demand for the transportation & logistic sector moving forward.

• We like energy sector with the elevated Brent oil price, while the tech sector could see upward potential after a near-to-40% drop in the sub-index from the peak.

• We favour the banking industry under the interest rate upcycle environment.

Endemic phase - Living with Covid-19

• The return of international travellers. Since April, Malaysia has uplift most of the Covid-19 SOPs and that will allow the return of international travellers that are fully vaccinated against Covid-19, entering the country without quarantine.

• Covid-19 indicators are stabilising as our vaccination rate has achieved above the 80% mark with booster shots hitting about 50% of the total population in Malaysia. Meanwhile, the hospitalisation, ICU and death rate are at a manageable level, suggesting that the Covid-19 will be treated like a normal flu moving forward.

Source: Mplus Research - 30 Jun 2022