DESPITE GROWING geopolitical tensions and concerns over inflation, RHB Research remains positive on Malaysia’s consumer sector, citing resilient spending patterns, supportive government policies and a largely stable operating environment.
Within the consumer product sector, RHB still prefers stocks with defensive qualities and domestic-centric earnings amid external uncertainties.
“We like NESZ and FFB for their staples exposure and strong pricing power, while MRDIY and ECOSHOP should benefit from valueseeking and downtrading behaviour, if the sentiment turns more cautious,” said RHB.
Among the 17 companies tracked by RHB Research, nine delivered results in line with expectations, seven fell short, while one outperformed forecasts.
The research house noted that revenue and net profit growth across the sector were supported by stronger consumer spending during the Lunar New Year and Hari Raya Aidilfitri festive periods.
Year-on-year sales performance remained largely stable for most companies under coverage, reflecting resilient consumer demand backed by steady economic expansion and a healthy labour market.
This, in turn, helped support profit margins through operating leverage.
However, management teams have become more guarded in their outlook compared to their earlier optimism.
Key concerns revolve around the ongoing conflict in the Middle East, which could weigh on consumer confidence while adding to inflationary pressures.
In response, many companies are exploring ways to manage rising operating costs, including higher expenses for raw materials, logistics and utilities, while also seeking initiatives to encourage consumer spending.
On a brighter note, most consumer-related firms have not experienced significant supply chain disruptions, nor do they expect major issues in the near term.
This is largely due to their scale, diversified sourcing strategies and sufficient inventory levels.
RHB believes the consumer sector will continue to serve as a defensive investment play amid market uncertainty, supported by its domestically driven earnings base and resilient spending patterns.
The growing role of the Sumbangan Asas Rahmah (SARA) programme as a form of fiscal assistance is also expected to channel additional spending into the sector.
Meanwhile, fuel subsidy policies remain important in sustaining consumption and keeping inflationary pressures in check.
While an extended conflict in the Middle East could affect consumer spending and increase cost pressures, RHB noted that the impact may be less pronounced on a year-on-year basis, as the sector was already operating in a challenging environment during the second and third quarters of 2025 due to uncertainty surrounding US reciprocal tariff measures.
In addition, the strong MYR, stabilising commodity price trends, and the Visit Malaysia Year 2026 campaign are sector drivers that could mitigate downside risks.
Downside risks identified by RHB include a prolonged geopolitical conflict, weaker consumer sentiment, sharper commodity cost inflation, supply chain disruptions, and subsidy rationalisation risks. —June 8, 2026
Main image: The Star
