BUOYED by improved consumer spending following a gradual re-opening of economy and easing of controlled movement, Malaysia’s consumer sector can expect to get a shot in the arm in the days ahead.
Additionally, the sector which was hard hit with movement restriction can also look forward to an adjustment in standard operating procedures (SOPs) which will provide more room to boost consumer spending, according to MIDF Research.
“Consumers who have not been able to physically shop in retail shops may be more encouraged to go out and spend,” justified analyst Ng Bei Shan in consumer sector update.
“The latest stimulus on top of the easing of controlled movement is expected to improve sentiment particularly in the upcoming Hari Raya celebration in May.
“We also expect the hotel, restaurant and café segment to recover with less movement restrictions.”
Yesterday, Prime Minister Tan Sri Muhyiddin Yassin unveiled the RM20 bil PEMERKASA stimulus package which is Malaysia’s eighth and the second for 2021 along with extensions of tax relief/incentives to tourism and retail as well as a 10% discount on electricity bills for selected industries.
Further positive takes from the economic package, in MIDF Research’s view, include the RM700 mil Wage Subsidy Programme 3.0 for an additional three months for companies that were closed during the movement control order (MCO).
“We expect the programmed to potentially benefit retailers such as Padini Holdings Bhd as its brick-and-mortar shops were closed during the period,” projected the research house.
“Another potential beneficiary is Aeon Co (M) Bhd as the department stores were not fully operational during the period. Other initiatives to help the SMEs are also likely to benefit Aeon’s tenants which in turn may spill over to Aeon Co.”
Moving forward, MIDF Research also expects initiatives in the form of financial assistance extended to the poorer segment of the society to create a feel-good factor, thus spurring the recipients to spend additional money on discretionary items.
“The additional allocation on vaccination programme may also promote more optimism towards job prospects and economic outlook,” opined the research house.
“Previously, consumers had focused on necessities and the additional cash may incentivise them to make discretionary purchases.”
All-in, MIDF Research upgraded the prospect of the consumer sector to “positive” (from “neutral” previously) as it believes the available initiatives under the latest stimulus package will spur consumer spending. – March 18, 2021
Photo credit: Bloomberg
