Kenanga Research & Investment

Author: kiasutrader   |   Latest post: Wed, 8 Dec 2021, 9:14 AM


Malaysia Distributive Trade - Softer Decline in August as COVID-19 Curbs Were Eased for the Fully-vaccinated

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● Distributive trade sales fell for the third straight month, but at a slightly slower pace in August (-10.2% YoY; Jul: -14.7%) as some of the COVID-19 restrictions were eased on August 10 for those who are fully-vaccinated

- Sales value (RM100.0b; Jul: RM92.7b): remained below the pre-pandemic level (Feb-20: RM109.0b) but registered its biggest monthly percentage gain in 14 months (7.9%; Jul: 0.5%) as buying activities started to pick up amid loosening of COVID-19 restrictions.

● The improved performance was broad-based, steered mainly by the sales of motor vehicles

- Motor vehicles (-57.6%; Jul: -85.4%): contraction softened to its smallest in three months, driven by improved sales of motor vehicles (-60.9%; Jul: -83.8%) and parts and accessories (-47.2%; Jul: -87.4%) as car factories and showrooms were allowed to resume operations.

- Wholesale trade (-0.1%; Jul: -1.1%): dropped by less, primarily due to a MoM improvement in sales of other specialised items and household goods.

- Retail trade (-7.5%; Jul: -8.1%): softer fall due to a smaller contraction in sales at non-specialised stores (-8.1%; Jul: -10.8%) and sales of automotive fuel (-6.2%; Jul: -14.1%).

● Retail trade performance across advanced and developing economies remained mixed

- US: climbed to 16.2% (Jul: 15.2%), probably due to back-to-school shopping and government’s child tax credit payments. On a MoM basis, retail sales rebounded by 0.7% (Jul: -1.8%), driven by a surge in online purchases.

- SG: fell to its lowest in seven months (-2.8%; Jul: 0.2%) as motor vehicle sales continued to decline (-17.5%; Jul: - 9.8%) amid a lower certificate of entitlement quota this year.

- CN: eased sharply to 2.5% from July’s 8.5%, mainly due to China’s zero-tolerance COVID-19 policy. This was well below the Reuters consensus estimates of 7.0%.

● 2021 distributive trade sales forecast maintained at 6.0%-8.0% (2020: -5.9%) due to the further easing of COVID- 19 restrictions and a positive economic outlook

- As the government prepares to transit to endemicity amid Malaysia’s high vaccination rates, most social and economic sectors are allowed to reopen from October 11 onwards. The reopening of the economy is expected to unleash pent-up demand and provide a boost to trade sales in the final quarter of the year.

- As such, value-added private consumption is projected to rebound to 9.5% in 4Q21 (3Q21 estimate: -4.5%), and primarily supporting a growth rebound in the 4Q21 GDP to 2.8% (3Q21 estimate: -1.4%).

Source: Kenanga Research - 13 Oct 2021

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