● Distributive trade sales grew 6.0% in December (Nov: 5.3%) on continued seasonal sales uptick

- MoM: best monthly gain in seven months (3.7%; Nov: 0.4%).

- 4Q19: eased to a 14-quarter low due to moderate wholesale trade growth indicating on-going weakness in domestic demand, in line with our forecast of a more moderate economic growth in 4Q19 (4.0%; 3Q19: 4.4%).

- 2019: lowest in three years (5.9%; 2018: 8.2%).

● Improvement in wholesale and motor vehicles contributed to steady distributive trade growth

- Wholesale trade: increased to a four-month high (5.5%; Nov: 4.4%) on better growth in sales of other specialised products and food, beverages & tobacco.

- Motor vehicles: rose to a seven-month high (4.5%; Nov: 3.0%) boosted by year-end promotional campaigns and a low base effect.

- Retail trade: maintained its 7.0% gain (Nov: 7.0%) supported mainly by retail trade at non-specialised stores.

● Mixed retail trade performance across advanced and developing economies

- US: accelerated to the highest since Sep 2018 (6.3%; Nov: 2.5%) due to last-minute shopping spree before Christmas.

- EU: decreased (2.1%; Nov: 2.3%) after stronger sales activity in November attributable to Black Friday sales.

● Distributive trade sales to soften further in 2020, registering within a range of 4.0-6.0% (2019: 5.9%)

- Coronavirus concern which continue to weigh on sentiment to cause decline in business confidence and disruption to the retail industry, subsequently impacting Malaysia distributive trade.

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

Source: Kenanga Research - 11 Feb 2020