RHB Research is expecting some “revenge spending” to take effect in the domestic market in the near-term, despite the bearish outlook for the fourth quarter this year (4Q 2020).
In a Dec 11 research note, it said that segments such as food, beverages and tobacco could see some rebound amid increased demand, as restaurant operating hours are expanded and domestic tourism resumes.
“We have seen some nascent increase in mobility which are expected to increase in the next few weeks,” it said.
The research firm also maintained its gross domestic product (GDP) forecast at -5.5% year-on-year (yoy) for 2020, to rebound to 6.3% for 2021.
Meanwhile, it said the return to negative industrial production growth for October confirmed its expectations of a weak 4Q 2020 GDP.
“Based on our estimations, the conditional movement control order (CMCO) implemented for much of 4Q 2020 weakened domestic demand and hence softened the domestic-oriented industries,” it said.
While the ease of restriction in parts of the country post-Dec 7 could lead to some revival in production, RHB Research expected that it would not be sufficient to offset the negative implication expected to be seen this quarter. – Dec 12, 2020