● Distributive trade sales expanded in November (5.3%; Oct: 5.0%) on continued seasonal sales uptick

- However, it remained amongst the lowest in over three years, indicating continued weakness in domestic demand, in line with our forecast of a more moderate economic growth in 4Q19 (4.0%; 3Q19: 4.4%).

- MoM: softer expansion (0.4%; Oct: 0.6%).

● Improvement in wholesale and retail trade outweighed slower growth in the motor vehicles segment

- Wholesale trade: increased to a two-month high (4.3%; Oct: 3.9%) on better growth in sales of other specialised products and household goods.

- Retail trade: inched marginally higher (7.0%; Oct: 6.8%) in part due to major sales events in November, specifically Singles’ Day and Black Friday.

- Motor vehicles: eased (3.0%; Oct: 3.7%) on lower vehicles sales. Projected to strengthen in December boosted by year-end promotional campaigns and a low base effect.

● Increased retail trade performance across most advanced and developing economies

- US: ticked up (3.0%; Oct: 2.8%), but below expectation and in contrast with the usually much stronger figures seen in the festive month of November.

- CN: accelerated to a five-month high (8.0%; Oct: 7.2%) buoyed by online purchases on Singles’ Day.

- KR: fastest expansion in 15 months (4.3%; Oct: 2.1%) supported by the Korea Sale FESTA (Korea’s largest shopping season) which ran for three weeks from November 1.

● Distributive trade sales to ease further in 2020, registering within a range of 4.0-6.0% (2019F: 5.7-6.3%)

- Negative spillover to wages and consumer confidence from slowdown in major economies, potential re-escalation of trade dispute and rising geopolitical unrest to weigh on domestic demand.

- Private consumption to soften to 5.5% in 1Q20 (4Q19F: 6.5%), dragging the GDP growth to 3.8% (4Q19F: 4.0%).

Source: Kenanga Research - 13 Jan 2020