According to the Department of Statistics Malaysia (“DOSM”), retail sales for Jan 2023 stayed at double-digit growth for the 10th consecutive month. The retail trade rose +21.7%yoy to RM59.6b. On monthly basis, retail trade expanded (+0.2%mom) in Jan 2023, albeit at a slower rate than in Dec 2022 (+1.2%mom) and Nov 2022 (+0.7%mom). Despite a higher OPR of 2.75% in Jan 2023 compared to 1.75% in Jan 2022, retail sales remained robust and continued their upward momentum in Jan 2023.
Given that the OPR stays below the 3.00-3.25% range (pre-pandemic level), together with moderating inflationary pressures and a stable labor market (Unemployment rate: 3.6%), research house MIDF said it is upbeat on domestic consumer spending in the short term. Furthermore, with various cash assistance, incentives, and income tax reductions offered in Budget 2023 for B40 and M40 income groups to enhance household income and stimulate domestic spending, MIDF expects retail sales to remain solid in 2023. Meanwhile, the higher arrival of tourists with the reopening of most nations’ borders, notably from China, will further enhance Malaysia’s retail sales.
All in, the house opines that retailers such as Aeon Co (BUY, TP: RM1.90) and Padini (BUY, TP: RM4.40) would benefit from solid retail sales in 2023.
