Hong Leong Investment Bank Bhd (HLIB) maintained its OVERWEIGHT call on the consumer sector, with 99 Speedmart Retail Holdings Bhd and Focus Point Holdings Bhd as its top picks, saying the sector is supported by resilient domestic consumption, improving margins from lower costs and a potential tourism recovery in the second half of 2026.
HLIB said consumer demand remained steady despite external pressures, with April 2026 retail trade growing 6.3% year-on-year compared with 4.7% in April 2025. On a year-to-date basis, retail trade growth averaged 6.9% in the first four months of 2026, exceeding the 6.3% recorded during the same period a year earlier.
The research house expects household spending to remain supported by ongoing fuel subsidies, the second phase of the SSPA wage adjustment for civil servants and flexibility in EPF Account 3 withdrawals.
HLIB noted the second phase of the salary revision provides a permanent income boost for around 1.6 million civil servants, with overall remuneration increasing between 3% and 7% depending on grade. It added that Rahmah initiatives, which totalled RM15 billion in 2026, could continue supporting consumption, particularly in value-oriented retail and essential segments.
The brokerage also expects easing commodity and logistics costs to provide relief for consumer companies. Lower cocoa, coffee, sugar, milk powder and wheat prices could support margins for food and beverage operators, while reduced freight costs may benefit retailers.
Looking ahead, the research house expects tourism recovery to provide further support in 2H26, with Malaysia recording 10.6 million international tourist arrivals in the first quarter of 2026, up 5% year-on-year.
