INVE$T | Market Sentiments
According to Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift, the exchange and HSBC Amanah Malaysia Bhd has entered into a memorandum of understanding (MoU) to collaborate on an initiative aimed at improving Malaysian PLCs’ environmental, social and governance (ESG) adoption practices. Under this MoU, both parties would collaborate in developing sustainability-linked Islamic financial products as well as ESG solutions aligned to the FTSE4Good ratings model and datasets for eligible PLCs. PLCs in the FTSE Bursa Malaysia EMAS index, which made up the FTSE4Good ESG assessment universe, would have the opportunity to tap into HSBC Amanah’s Shariah-compliant ESG offerings while enabling them to accelerate their ESG adoption. This would help improve their ESG ratings for inclusion into the FTSE4Good Bursa Malaysia Index, the Malaysian capital market’s leading ESG index. Additionally, it would be an opportunity for Shariah-compliant PLCs to be included into the FTSE4Good Bursa Malaysia Shariah Index, which was introduced in July 2021. Having PLCs that are able to successfully manage their ESG risks and opportunities via Shariah-compliant ESG solutions will certainly reinforce Malaysia’s role as a leader in Islamic finance. Meanwhile, according to HSBC Amanah CEO Raja Amir Raja Azwa, HSBC Amanah is pleased to join Bursa Malaysia in developing this important initiative towards enabling PLCs on their sustainability journey through the provision of advisory and Shariah-compliant financial solutions as a practitioner of value-based intermediation. This is very much aligned to the bank’s own journey in transforming HSBC Amanah into a leading sustainable bank in line with the triple-bottom line approach of prosperity for people and planet and in support of the Malaysian Government’s National Determined Contribution to the Paris Agreement. PLCs interested in learning more about the initiative or improving their general ESG practices may contact the exchange’s index and sustainable business unit via email at isb@bursamalaysia.com.
Retail & Wholesale trade up 1.4% in Q4, 2.1% higher in 2021 – DOSM
According to Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s wholesale & retail trade rebounded 1.4% in the fourth quarter (Q4) of 2021 which translates to a 2.1% increase in the volume index for the full year. The increase for the year was attributed to the motor vehicles sub-sector which rose 3.7%, followed by retail trade with 2%. However, the figures indicated wholesale trade inched down marginally at 0.03% in the same period. For quarter-on-quarter (q-o-q) comparison, the volume index jumped 16.3%, supported by motor vehicles which surged 136.9%. Compared to the fourth quarter of 2019 which was before the Covid-19 pandemic, index volume of this sector expanded to record 2.1%. Looking at the performance across sub-sectors, the volume index of motor vehicles which expanded 3.7% year-on-year (y-o-y) was mainly contributed by sales of motor vehicle and sales, maintenance & repair of motorcycles which posted positive growth of 8.9% and 1.7%, respectively. Maintenance & repair of motor vehicles and sales of motor vehicle parts & accessories decreased -2.3%, and -1.5%, respectively. For the quarterly performance, the volume index of motor vehicles surged 136.9% as compared to the preceding quarter, spearheaded by sales, maintenance & repair of motorcycles with 258.2%. On the other hand, retail trade’s volume 2% gain was attributed to retail sale not in stores, stalls or market with 23.9%. This was followed by retail sale of food, beverages & tobacco 6.5%, retail sale in non-specialised stores 6.2%, retail sale via stalls & market 5.9%, retail sale of automotive fuels 4.6%, retail sale of cultural & recreation goods 0.3%, and retail sale of information & communication equipment 0.1%. Meanwhile, the volume index of retail trade climbed 10.8% compared to the previous quarter. Volume index of wholesale trade sub-sector edged down marginally 0.03% in Q4’21 from Q4’20 and the contraction was attributed to wholesale on a fee or contract basis which eased 7.5%. This was followed by other specialised wholesale which contracted 4%. However other groups in this sub-sector posted positive growth. For q-o-q comparison, volume index of wholesale trade went up 6.%. As for seasonally adjusted volume index, wholesale & retail trade soared 15.3% as against the third quarter of 2021. All sub-sectors recorded positive growth namely motor vehicles 137.1%, retail trade 8.5% and wholesale trade 6%. The volume index of wholesale & retail ended 2021 with 124.1 points, which went up 2.1% supported by wholesale trade and retail trade which grew 3.8% and 3.4%, respectively. As for pre-pandemic comparison, this sector remained below the 2019 figure with -4.2%, pulled down by the motor vehicles sub-sector which slipped -10.2%.
Consumer spending to continue growing – Unemployment seen hovering below 4% in 2H2022
According to MIDF Research, consumer spending in Malaysia is set to stay on an upward trajectory this year, underpinned by significantly high vaccination rate, improving labour market, fiscal incentives and stable inflationary pressure. Private consumption and the services sector is expected to contribute positively towards gross domestic product in Q42021. The three-month moving average of distributive trade sales was 5.1% higher year-on-year (Q3 2021: 9.1% drop year-on-year or y-o-y) for the final quarter of 2021. In December 2021, Malaysia’s distributive trade sales growth was 3.5% higher y-o-y, led by motor vehicles (1.5% higher y-o-y), wholesale (4.1% higher y-o-y) and retail (3.5% higher y-o-y). The unemployment rate is expected to hover below 4% in 2H2022 and average at 4% this year. In December 2021, the jobless rate had hit a new pandemic low of 4.2%, as the number of unemployed persons fell below 700,000 for two consecutive months since November 2021. Employment growth in December 2021 reached a seven-month high at 2.8% growth y-o-y, thanks to continuous expansion in both export-oriented and domestic-focused industries. Also, inflationary pressure is predicted to trend lower following receding low-base effects from fuel inflation, especially with retail fuel prices to remain status quo. Cost-induced pressures are set to ease off, given that leading indicators on supply constraints are showing moderating patterns. Steady employment growth and stable inflationary pressure are key fundamentals to benefit and support Malaysia’s consumer spending in the fourth quarter of 2021 as well as for 2022. The country’s retail trade is expected to expand by 5.5% and private consumption to expand by 6% this year with the relaxation of containment measures, economic re-opening and progressive improvements in macroeconomic data, setting the stage for strong consumer spending. With interstate travels allowed, the services sector is projected to benefit and increase by 7.1% this year. Meanwhile, should Malaysia’s international borders be re-opened on March 1, this will be an additional catalyst for the services sector via tourism activity. However, borders are not expected to reopen fully in the first half of this year as the Health Ministry had forecast daily infection cases to peak at 22,000 by the end of next month. Additionally, the vaccine rollout for children aged five to 11 years old had just started in February and they may take at least one-and-a-half months to be fully vaccinated. Meanwhile, retail spending patterns are expected to shift slightly from pre-pandemic years, especially on information and communications technology (ICT) and household items, thanks to remote working and learning arrangements. Spending on non-specialised stores for groceries’ shopping fell in terms of distributive trade sales share to 14.9% in 2021, from a peak point of 15.3% in 2020. As consumers adapted to the new normal, expenditure on ICT products rose to a record high at 4.2% of total distributive trade sales. This year, automotive fuel share is also expected to rebound to its pre-pandemic level at 3.4% (2021: 3.1%) with interstate movements allowed.
Eye On The Markets
This week, on Friday (11Feb), the Ringgit opened at 4.1890 against the USD from 4.1850 on Monday (7Feb). Meanwhile, the Ringgit was 3.1123 to the Sing Dollar on Friday (11Feb). On Monday (7Feb), the FBM KLCI opened at 1525.23. As at Friday (11Feb) 10:00am, the FBM KLCI is up 41.70 points for the week at 1566.93. Over in US, the overnight Dow Jones Industrial Average closed down 526.47 points (-1.47%) to 35,241.59 whilst the NASDAQ shed 304.73 points (-2.10%) to 14,185.64.
