Macquarie Equities Research (MQ Research), in collaboration with ACIES Malaysia, has conducted proprietary randomized stratified survey to glean insight into Malaysian’s personal health and finances, as well as sentiment on economic and political outlook. Despite increased demands and consumer spending, people prioritise rebuilding savings rather than spending on non-essential items or purchasing big ticket items such as vehicles, houses and holidays. MQ Research also summarised other survey findings, covering the economic sector while highlighting My E.G. Services and Telekom Malaysia, among others, as its top thematic sector.

Key Points

• Pent-up demand is driving consumption, but will it last? MQ Research’s survey finds consumers prioritise rebuilding savings and eschew big-ticket items.
• Focus shifting from public health to the economy. Managing cost of living will be crucial for government going forward.
• Conflicting indicators on government’s popularity; MQ Research thinks pressure for populist policies remains, at least until elections are done.

Unpacking the Demand Pulse

• In the third edition of MQ Research’s survey, MQ Research turns its focus towards consumer behaviour as Malaysia transitions to an endemic strategy. Pent-up demand is driving substantial revenge spending, but MQ Research’s survey suggests it will wane. Only 24% of respondents were spending more on non-essentials (Question 5). Meanwhile, respondents are substantially prioritising disposable income for rebuilding savings (Question 7). Big ticket items like upgrading vehicle/house or a holiday ranked at the bottom. MQ Research will continue to monitor these trends, as consumer appetite may yet improve in line with economic sentiment.

• But on a positive note, Malaysians appear to be embracing the endemic strategy. Perceived safety (Question 1) continues to improve on the back of >90% vaccination rates (adults), and support for economic reopening remains well over two-thirds. However, tolerance remains low for high-risk discretionary activities like opening the borders for international tourists (Question 12; 32% support) and holding a general election (Question 13; 19% support).

From Heath to Wealth

• Attention is quickly shifting away from public health with cost of living now the number one issue (Question 15). MQ Research has flagged food inflation as a key pressure point for policymakers in the coming months, with certain basic foods prices like chicken up +40% already. Though indicators were mixed, MQ Research thinks the survey suggests government popularity could be relatively fragile (only 29% support for PM, Question 23), especially if the economy underperforms. MQ Research sees policy risk persisting, at least until the government secures a clear mandate via elections. As MQ Research has pointed out, the Prosperity Tax may be one-off, but the need for tax revenue is not. 

Sectoral Read-thru

• Digitalisation: ~32% of respondents preferred online over physical retail. The pandemic has accelerated digitalisation of the economy, and is MQ Research’s top thematic for domestic companies. MQ Research’s top picks here are TM, My E.G. Services (MYEG) and GHL.

• Big ticket items: While MQ Research’s expect super-cycle sales in 4Q, property and auto could see demand taper off by 2Q22 once pent-up demand is exhausted.

Tourism:

• MQ Research worries stringent SOPs imposed on tourists may be a deterrent to volumes, while underlying outbound demand may prove tepid outside of the initial post-reopening rush. Remote working also reduces need for business travel. MQ Research is forecasting 65%/80% passenger traffic recover by FY22/23.

Source: Macquarie Research - 11 Nov 2021