Retail sales continued its double-digit growth for the fifth consecutive month, up 14.1% y/y in July which is the fastest gain, while wholesale trade expanded by 9.2% y/y in July and motor vehicle sales rose 9.8% y/y to erase the entire -4.8% y/y in June.

We expect retail sales to remain strong supported by: (1) tourism; (2) government investments; (3) better consumer sentiments; (4) online sales where many international retailers operate apart from shops; and (5) mobile wallets and related financial services between Alibaba’s (BABA) financial affiliate, Ant Financial Services Group and Malaysian bank CIMB. Additional booster will come from the festive seasons.

This should bode well for the SMEs involved in this segment of the business, contributing about 62% of the total SME services sector, which in turn account for about 59% of its GDP. It is important to take note that most of the businesses in Malaysia are SMEs. We project the SME GDP to grow around 6.1% – 6.3% in 2017 with Malaysia’s GDP targeted at 5.7% – 5.9%.

• Retail sales continued its double-digit growth for the fifth consecutive month. In July retail sales accelerated by 14.1% y/y from 13.9% y/y in June which is the fastest gain we have seen in one year. At the same time, wholesale trade expanded by 9.2% y/y from 8.4% y/y in June. Likewise, motor vehicle sales rose 9.8% y/y in July, totally erasing the -4.8% y/y in June.

• We expect retail sales to remain strong. Sales will continue to be supported by: (1) steady flow of tourists; (2) investments by the government; (3) better consumer sentiments; (4) online sales where many international retailers operate apart from shops; and (5) mobile wallets and related financial services between Alibaba’s (BABA) financial affiliate, Ant Financial Services Group and Malaysian bank CIMB. Additional booster will come from the festive seasons

• Hence, we feel this should bode well for SMEs involved in this segment of the business, contributing about 62% of the total SME services sector which in turn accounts for about 59% of its GDP. It is important to take note that most of the businesses in Malaysia are SMEs. We project the SME GDP to grow around 6.1% – 6.3% in 2017 with Malaysia’s GDP targeted at 5.7% – 5.9%.

Source: AmInvest Research - 14 Sept 2017