This article first appeared in Capital, The Edge Malaysia Weekly on July 13, 2026 - July 19, 2026

TOURISM and tourism-related counters may be set for a stronger second half as Visit Malaysia 2026 (VM2026), firmer regional travel and easing fuel costs revive a sector that was disrupted earlier this year by the Middle East conflict and the temporary closure of the Strait of Hormuz.

The sector had entered 2026 with high expectations. Malaysia’s Asean chairmanship in 2025 and the Visit Malaysia campaign, which has since been extended to 2027, had put aviation, consumer, retail and selected real estate investment trust (REIT) counters on investors’ watchlist. But the outbreak of war on Feb 26 pushed Brent crude above US$120 per barrel, raised concerns over airfares and fuel surcharges and triggered volatility across travel-linked stocks.

Those pressures have since eased. The tentative reopening of the Strait of Hormuz amid a fragile peace, and Brent crude’s correction to about US$73 last week should help reduce jet fuel costs and support cheaper international air tickets heading into the year-end holiday season, BIMB Securities director of research Mohd Redza Abdul Rahman tells The Edge.

“While momentum [in the first half] has been softer than expected so far, we continue to expect a pickup in the second half, supported by stronger regional travel from Singapore, Indonesia, China and India, improved flight connectivity and promotional initiatives under VM26. That said, downside risks remain, including competition from regional peers (such as Vietnam, Philippines and Indonesia), and rising cost pressures,” Kenanga Research analyst Thin Yun Jing says.

The research house maintains its in-house forecast for tourist arrivals to reach 30 million in 2026 (2025: 26.6 million), representing 12.7% year-on-year (y-o-y) growth.

This week, we revisit tourism and tourism-related counters that were tipped to benefit from a stronger travel recovery in 2026, to see which have delivered and which have lagged.

At the end of 2025, aviation was listed as a key beneficiary of VM2026. MBSB Research in its Nov 13, 2025 report said companies in transport, hospitality, healthcare and consumer sectors were well placed to benefit from higher tourist arrivals and increased passenger traffic.

Malaysia-based airline operators had been ramping up fleet size and network capacity to meet the expected growth in demand, and the combined active fleet including AirAsia X Bhd (KL:AAX) was expected to reach 329 aircraft in 2026, up 30% from 253 aircraft in 2024.

AirAsia X, which is now the unified parent entity for all AirAsia-branded flights following its corporate restructuring exercise, was seen as the clearest Bursa Malaysia-listed aviation proxy. The counter, however, has not delivered the share price performance investors would have hoped for. The stock fell from RM2.33 apiece in late January to about RM1.14 last Wednesday, after already dropping 10% in 2025.

Its first quarter ended March 31, 2026 (1QFY2026) numbers underlined the pressure facing the airline company. AAX posted a net loss of RM154.9 million, on revenue of RM5.4 billion, mainly due to a RM232.2 million foreign exchange loss arising from regional currency weakness against the US dollar. About 15% of the fleet (204 operating aircraft) was not in operation during the quarter.

Capital A Bhd (KL:CAPITALA) was previously MBSB Research’s favoured pick for the sector for the anticipated VM2026 uplift and the group’s ongoing restructuring then. Investors looking into the counter would no longer be buying a pure passenger recovery story but an aviation services ecosystem. Since the restructuring that was completed in May this year, Capital A has pivoted from short-haul flights to an asset-light, non-airline holding company focusing on five core digital and aviation-service businesses, namely in maintenance, repair and overhaul (MRO) engineering, logistics, travel platform, brand and intellectual property, and food and beverage.

Capital A is still a “buy” call for MBSB Research, with a higher target price of RM1.26 from 95 sen previously.

For context, Malaysia welcomed 10.65 million international arrivals in the first quarter of 2026, up 5.4% y-o-y from 10.1 million in 1Q2025.

Inbound volume from China rose 25.2% y-o-y, adding to the traditional Asean source markets of Singapore, Indonesia and Thailand. Redza says arrivals from India, Bangladesh and Indonesia helped offset the weakness in inbound tourists from the western hemisphere caused by the earlier aviation and energy shock.

He adds that the sharp fall in crude prices should ease jet fuel crack spreads. “With fuel making up 30% to 40% of an airline’s operating costs, the pricing relief could lead to a rollback of aggressive fuel surcharges and stimulate long-haul demand in 2H2026.”

A number of consumer names linked to the tourism industry were highlighted last year, including the likes of Fraser & Neave Holdings Bhd (KL:F&N), as analysts reportedly expected more out-of-home beverage demand, particularly for 100Plus and food-service channel, and QL Resources Bhd (KL:QL), whose FamilyMart chain has been regarded as a beneficiary of higher demand for snacks and ready-to-eat meals, amid increasing tourist arrivals.

The convenience story chain, which makes to about 18% of QL’s revenue, posted a profit before tax of RM47.76 million for the financial year ended March 31, 2026, declining by 23% from RM62.3 million the year before. Revenue increased marginally by 3% to RM1.25 billion despite a net increase of 45 stores and 37 FamilyMart Mini due to lower average store sales amid soft consumer sentiment, a competitive food and beverage environment and exclusion from the Sumbangan Asas Rahmah programme.

In earlier reports, Kenanga Research highlighted Spritzer Bhd (KL:SPRITZER), Life Water Bhd (KL:LWSABAH) and Oriental Kopi Holdings Bhd (KL:KOPI), as potential beneficiaries of stronger tourist arrivals.

“The bottled water segment has done well in both earnings delivery and YTD (year to date) share price performance, where price performance also reflected their ability to pass on higher costs,” Kenanga Research analyst Thin tells The Edge.

According to former investment banker and private investor Ian Yoong Kah Yin, who has long held a positive view on the tourism sector, his investment in Spritzer appreciated 91%, before dividends, in the 12 months to June 30, 2026.

Life Water is similar to Spritzer with its bottled water business, but with additional exposure to Sabah and Sarawak. The counter, which stood at 81 sen 12 months ago, closed 86% higher at RM1.51 last Wednesday.

Phillip Research, which initiated a “buy” call on Oriental Kopi with a target price of RM1.26 in a June 18 note, says the company’s delivery of a strong historical profit compound annual growth rate of 88% from FY2022 to FY2025, reflecting expansion despite its relatively short operating history.

“[This should be] driven by the addition of 28 outlets from FY2026 to FY2028, contribution from its higher-margin fast-moving consumer goods segment and margin expansion from improved operating leverage and a more favourable product mix. The anticipated tourism uplift from VM2026 is expected to support higher footfall, particularly at tourist-centric locations. Oriental Kopi’s collaboration with Tourism Malaysia under the ‘Rasa Malaysia’ initiative positions its signature product as a representative Malaysian offering, which we expect to translate into stronger traction from international tourists,” says Phillip Research.

Meanwhile, MyNews Holdings Bhd (KL:MYNEWS) and 7-Eleven Malaysia Holdings Bhd (KL:SEM) are expected to benefit from higher demand for snacks, beverages and ready-to-eat meals, while Farm Fresh Bhd (KL:FFB) and Nestlé Malaysia Bhd (KL:NESTLE) were also flagged previously as beneficiaries of impulse purchases such as ice cream.

YTD, shares of MyNews have been 20% lower to close at 44 sen last Wednesday, while 7-Eleven fell one sen to RM1.99 on the same day. Farm Fresh shed 17% to RM2.30 and Nestlé Malaysia lost 20% to close at RM91.10.

In any case, Kenanga Research maintains its “overweight” call on the consumer sector and favours value-oriented retailers “that are laggards” on the expectation of an expansionary Budget 2027 ahead.

To this end, the research house lists Mr DIY Group (M) Bhd (KL:MRDIY), which closed 6.5% higher YTD at RM1.65 last Wednesday, as a beneficiary.

For several years, as the economy recovered from the effects of the Covid-19 pandemic, Padini Holdings Bhd (KL:PADINI) was seen as a proxy of value-oriented retail.

However, its share price, which peaked at RM2.02 on Feb 12, a fortnight prior to the Middle East conflict, lost about 30% to close at the RM1.41 level last Wednesday.

Padini’s share price, which started sliding late February amid weaker than expected earnings, faced further pressure following news on April 24 that the Malaysian Anti-Corruption Commission had frozen its and its subsidiaries’ bank accounts. The company’s net profit of RM60.5 million for the third quarter ended March 31, 2026, was 18.9% lower than the RM71.97 million during the same period last year on marginally lower revenue of RM624.5 million.

Yoong, who maintains a positive view on the stock, notes that “Padini is in a net cash position of RM660 million, equivalent to about 47% of its RM1.4 billion market capitalisation, with a dividend yield of 6.5%. Its price-earnings ratio is about 10 times, or five times ex-cash”.

“Padini is a well-managed apparel and footwear retailer. Its Vincci brand is popular with Middle Eastern customers. Most likely because its leather products are shariah-compliant and styling that appeals to Middle Eastern customers,” he adds.

Some market watchers and people in the tourism industry believe that hotel stocks may not fully reflect the positive impact of strong tourist arrivals on the hotel sector.

Malaysian Association of Hotel Owners executive director Shaharuddin M Saaid and Yoong point to vacation rental stay platform Airbnb, saying that’s where accommodation traffic has been partially diverted to for years now.

Yoong estimates that Airbnb contributes RM9 billion annually to Malaysia’s gross domestic product, with Kuala Lumpur alone having 17,000 to 22,000 active Airbnb listings, depending on seasonal factors.

Some of the analysts whom The Edge spoke to suggest that REITs may offer a cleaner way to capture tourist spending than airlines or hotels during the second half.

They name Pavilion REIT (KL:PAVREIT), KLCC Stapled Group (comprising KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust) (KL:KLCC), IGB REIT (KL:IGBREIT) and Al-Salam REIT (KL:ALSREIT) as beneficiaries.

Pavilion REIT and KLCC Stapled Group are seen as good premium retail tourism proxies given their exposure to foreign shoppers, luxury tenants (and office occupancy by Petroliam Nasional Bhd for KLCC Stapled Group) as well as tourist traffic.

Meanwhile, IGB REIT which owns Mid Valley Megamall, The Gardens Mall and Mid Valley Southkey in Johor Bahru, is also said to be “attractive at current levels”.

“According to Bloomberg, the dividend yield is 5.95% and price-earnings ratio is 14 times,” Yoong points out.

“Looking back at our 2025 review, the market drew an incredibly sharp line between operators controlling high-yield, premium asset ecosystems and those exposed to the raw volatility of operational inflation. Our structural optimism toward prime retail and integrated tourist hubs, specifically KLCC Stapled Group, Sunway REIT (KL:SUNREIT), and Al-Salam REIT saw good returns. Driven by a massive influx of high-spending North Asian, South Asian and regional cohorts, they achieved historic operational milestones. Suria KLCC’s resilient retail performance supported KLCCP Stapled Group’s record FY2025 distribution payout of 47 sen, while Sunway REIT climbed to a 52-week high of RM2.67,” says BIMB’s Redza.

Meanwhile, Redza points to Al-Salm REIT (KL:ALSREIT) as a “key beneficiary of Johor’s tourism recovery and cross-border spending from Singapore, posting a 158% surge in FY2025 profit, as its flagship Komtar JBCC asset recorded stronger occupancy, improved rental rates and sustained tenant demand at the Johor-Singapore gateway”.

“Al-Salam REIT offers the highest projected yield among our REIT coverage at 7.7% for 2026 and 8.7% for 2027, supported by lower financing costs following its Sukuk Wakalah refinancing and improving Komtar JBCC contribution fuelled by well received ETS train service from KL-JB. The train station has direct access to JBCC and upside from RTS which is expected to start operation next year. Note that RTS station has direct connection to 3rd floor of JBCC,” he explains.

Redza also highlights healthcare operators that stand to benefit from medical tourism.

“IHH Healthcare Bhd (KL:IHH) and KPJ Healthcare Bhd (KL:KPJ), capitalised beautifully on high-margin cross-border tertiary patients to maximise revenue intensity per occupied bed. Ultimately, the past year provided absolute validation of our core thesis, [that] in a high-cost macro environment, owning the defensive physical real estate where wealthy and cross-border travellers naturally congregate is infinitely safer and more lucrative than capturing generic, mass-market volume,” he says.

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