Malaysia's Retail Sector Surges With 7.8pc Growth In Q1 2024 Amidst Consumer Challenges

Economic

Summary:

The performance across retail sub-sectors varied significantly during the period as department stores combined with supermarkets saw a robust growth of 12.3 per cent, while standalone department stores recorded a 9.7 per cent increase.

Malaysia’s retail sector recorded a better-than-expected growth rate of 7.8 per cent in retail sales, as compared to the same period in 2023, according to the latest report from Retail Group Malaysia (RGM) released today.

It said members of Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA) had projected the third quarter growth at 1.7 per cent.

The robust growth was fuelled by various factors including the Chinese New Year festivities, extended school holidays from February to March, and the beginning of Ramadan on March 12.

These events boosted consumer spending, alongside the distribution of Sumbangan Tunai Rahmah (STR) Phase 1 to 8.2 million Malaysians and increased tourist arrivals attracted by favourable exchange rates and visa-free entry for Chinese visitors.

However, challenges persisted due to rising food prices and global geopolitical tensions, which led to boycotts of certain international brands, affecting market dynamics.

Economically, Malaysia saw a 4.2 per cent growth overall in the first quarter, with retail sales climbing by 7.8 per cent.

This growth was supported by strong consumer spending, increased investments, a stable labour market, and a rise in tourist numbers.

Key sectors such as services and construction expanded by 4.7 per cent and 11.9 per cent respectively, while inflation averaged 1.7 per cent, driven mainly by higher costs for dining out and utilities.

In March alone, dining out expenses rose by 3.5 per cent, and costs for restaurants, accommodation services, housing, and utilities increased by 3.0 per cent.

Private consumption grew by 4.7 per cent during the quarter, driven by sustained spending on both essential and discretionary items.

Despite these positive indicators, consumer sentiment – as measured by the Consumer Sentiment Index by the Malaysian Institute of Economic Research – dipped to 87.1 points in the first quarter due to concerns over rising living costs and future job prospects.

Unemployment rate held steady at 3.3 per cent, with labour force participation reaching a record high of 70.2 per cent.

Supermarkets and hypermarkets grew by 2.0 per cent, and mini markets, convenience stores, and cooperatives expanded by 5.6 per cent.

Fashion and fashion accessories led the charge with a 12.6 per cent growth, while children and baby products saw a 4.8 per cent increase and pharmacies grew by 8.2 per cent.

Personal care products grew by only 0.4 per cent, and furniture & furnishings, home improvement, and electrical & electronics declined by 2.1 per cent.

Other specialty stores, however, achieved a growth of 4.6 per cent.

The food and beverage (F&B) sector continued to perform well in the first quarter of 2024, driven by festive celebrations and school holidays.

However, higher food prices increased costs for F&B operators as the ongoing Israel-Palestine conflict led to boycotts of certain international F&B franchises, affecting their operations.

F&B outlets, including cafes and restaurants, grew by 7.4 per cent while take-away outlets saw a 9.7 per cent increase.

This boycott is expected to continue in the medium term, impacting business operations.

Looking ahead, cafe and restaurant operators anticipate a 7.3 per cent growth in sales for the upcoming quarter, while food and beverage kiosks and stalls foresee a slower 5.5 per cent increase.

RGM initially projected a 4.0 per cent growth in retail sales for the full year of 2024 but later revised this down to 3.6 per cent, citing a strong first quarter and moderate expectations for the second quarter.

It said the primary challenge for Malaysia’s retail sector remains the escalating cost of living affecting consumers across all income brackets.

RGM added that the depreciation of the Malaysian currency continues to impact businesses dealing in imports, leading to higher prices for consumers.

Since January 1, a 10 per cent sales tax on online sales of imported goods has contributed to the uptick in retail prices.

Additionally, the service tax rate on many goods and services rose from 6.0 per cent to 8.0 per cent starting March 1, influencing retail expenditure.

The service tax on monthly electricity bills exceeding RM220.00 increased to 8 per cent from the same date.

In April, the introduction of EPF’s flexible Account 3 allowed members under 55 to withdraw funds, resulting in RM8.78 billion in applications by May 22, likely bolstering retail spending.

Moreover, the government’s decision to float diesel prices and initiate a subsidy program from June 10 could impact transportation costs and retail prices.

The planned High-Value Goods Tax (HVGT) has been postponed indefinitely, while tourism has shown signs of recovery with targeted arrivals of 27.3 million tourists and receipts amounting to RM102.7 billion for 2024.

With civil servant salaries set to increase by over 13 per cent from December 1, with a minimum salary rise to RM2,000 per month, year-end retail sales are expected to receive a significant boost.

RGM projects a 2.5 per cent growth in the retail sector for the third quarter and aims for a 3.2 per cent increase in the fourth quarter following last year's subdued performance.

Source:Malaymail

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Cohen

Economic

Stocks

India’s stock market value exceeded $5 trillion for the first time, with the latest boost coming from a commitment by Prime Minister Narendra Modi’s new coalition for policy continuity in the world’s fastest-growing major economy.

The country’s equity market has joined the ranks of the US, China, Japan and Hong Kong after topping the threshold last week, according to data compiled by Bloomberg. It took India about six months to add the latest $1 trillion to the capitalization of companies listed on its exchanges.

Indian stocks have been scaling new peaks since the ruling Bharatiya Janata Party secured sufficient support from key allies to form a coalition government, ensuring Modi’s return to power for a third straight term. The victory, alongside robust economic growth and a recent upgrade of India’s ratings outlook by S&P Global Ratings, are combining to burnish India’s appeal for global investors.

The formation of the new government with most key ministers retaining their portfolios “broadly affirms policy continuity,” according to Goldman Sachs strategist Sunil Koul. India remains a market with exceptionally stable macroeconomics and earnings growth is expected to continue, driving stocks higher, Koul said in a Bloomberg Television interview last week. India’s Stock Value Tops $5 Trillion as Modi’s Win Powers Rally_1

India’s Stock Value Tops $5 Trillion as Modi’s Win Powers Rally_1

A distinctive feature of gains in recent years has been the extent to which millions of young Indians have taken to equity investments. Local funds, including banks and insurers, have bought more than $26 billion in shares this year, while foreigners offloaded about $3.4 billion, according to data compiled by Bloomberg.

“The once dominant foreign institutional investors are no longer the sole drivers of the market,” according to Bino Pathiparampil, head of research at Mumbai-based Elara Capital.

Still, off-shore interest have started to return following the outcome of the elections.

“There appears ample money on the sidelines waiting to be deployed into India from foreign regional funds and India dedicated funds,” said Chetan Seth, a strategist at Nomura Holdings Inc. “Foreigners have not been able to get enough of India largely due to concerns around valuations and are still underweight.”

India’s benchmark NSE Nifty 50 Index closed at a fresh all-time high on Friday and is headed for an unprecedented ninth-straight year of gains. The shares of smaller and mid-sized companies have also been rallying and outperformed their larger peers in recent years to account for about 40% of the total market valuation. The market was closed on Monday for a public holiday India’s Stock Value Tops $5 Trillion as Modi’s Win Powers Rally_2

India’s Stock Value Tops $5 Trillion as Modi’s Win Powers Rally_2

Source:Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Daily News

[Quick Facts]

1. Fed's Harker sees one rate cut appropriate this year.

2. Israeli PM Netanyahu has dissolved the war cabinet.

3. Three U.S. stock giants account for 10% of global market cap.

4. A 39% probability that the Fed will keep rates unchanged in Sept.

[News Details]

Fed's Harker sees one rate cut appropriate this year

While last week's Consumer Price Index reading was "very welcome," progress on inflation so far this year has been modest, Philadelphia Fed President Patrick Harker said on Monday. He needs to analyze more data over the coming months in order to take a decision given the overall choppiness.

Harker, however, did not rule out changing his view on rates as more economic data is parsed. He sees slowing but above-trend economic growth, a modest rise in the unemployment rate, and a "long glide" back to target for inflation as his base case. If all of it happens to be as forecast, he thinks one rate cut would be appropriate by year's end, but he sees two cuts, or none, for this year as quite possible.

Israeli PM Netanyahu has dissolved the war cabinet

On June 17, local time, Israeli Prime Minister Benjamin Netanyahu announced that the war cabinet had been dissolved, following the withdrawal of his principal rival, Benny Gantz, the leader of the "National Unity Party". There is a comment that this will intensify the contradiction and disagreement within the Israeli wart cabinet. With new members calling to join, a more extreme wart cabinet could emerge.

Three U.S. stock giants account for 10% of global market cap

After the market capitalization of Microsoft, Apple and Nvidia surpassed $3 trillion, these three companies accounted for more than 20% of the S&P 500 index, according to data from Strategas. The influence of U.S. stocks is expanding globally, with a market capitalization of more than 60% of global markets. Howard Silverblatt, Senior Index Analyst for S&P Dow Jones Indices found that these three U.S. stock giants have accounted for 10.6% of global market capitalization, which is unprecedented in history.

A 39% probability that the Fed will keep rates unchanged in Sept

According to the CME FedWatch Tool, the probability of the Federal Reserve keeping interest rates unchanged in August is 90.7%, and the probability of a 25 basis point cut is 9.3%. The probability that the Fed will leave interest rates unchanged in September is 39%, the probability of total 25bp cuts is 55.7%, and the probability of total 50bp cuts is 5.3%.

[Focus of the Day]

UTC+8 12:30 Reserve Bank of Australia's Interest Rate Decision

UTC+8 13:30 RBA Governor Bullock Holds a Press Conference

UTC+8 17:00 Germany ZEW Economic Sentiment Index (Jun)

UTC+8 17:00 Eurozone CPI MoM (May)

UTC+8 17:00 Eurozone ZEW Economic Sentiment Index (Jun)

UTC+8 20:30 U.S. Retail Sales MoM (May)

UTC+8 21:15 U.S. Industrial Output MoM (May)

UTC+8 22:00 Richmond Fed President Barkin Speaks

UTC+8 01:00 Next Day: Fed's Logan Participates in a Q&A Session

UTC+8 01:00 Next Day: Fed Governor Kugler Speaks

UTC+8 04:30 Next Day: U.S. API Crude Oil Stocks for the Week of June 14

Risk Warnings and Disclaimers

Add to Favorites

Alex

Economic

Commodity

Surging U.S. gasoline production and tepid demand early into the driving season have boosted American gasoline stocks in recent weeks, weighing on refining margins and oil market sentiment.

Weaker gasoline demand compared to last year, a well-supplied market with refineries boosting output after spring maintenance, and the recent slide in oil prices have helped lower U.S. gasoline prices at the start of the summer driving season. This is good news for American consumers and the sitting U.S. president seeking re-election in November.

However, rising stocks and refinery runs are depressing refining margins, which could prompt U.S. refiners to reduce fuel production soon, especially if gasoline demand remains tepid for most of the summer.

The biggest wild card for gasoline supply and prices later this summer could be what is expected to be a busier-than-usual hurricane season that could force some U.S. Gulf Coast refineries to shut down operations in case major storms move to the coasts of Texas and Louisiana in August and September.

Combined, the two refining regions, Texas and Louisiana, account for 48% of total U.S. refinery capacity, while the potential for a stronger hurricane season suggests heightened risk for weather-related production outages in the U.S. oil and natural gas industry, the EIA warned last month.

Although the path of a single hurricane or major storm is unlikely to affect more than a single cluster of refineries, more than 1.0 million barrels per day (bpd) of capacity could be temporarily taken offline in anticipation of a major storm, the administration said.

Until a potential shutdown of refineries occurs later this summer, the early summer picture of the U.S. gasoline market suggests that refiners may have overestimated demand.

Weekly gross inputs into U.S. refineries jumped to 17.511 million bpd in the latest reporting week to June 7, EIA data showed. That’s the highest since 2019, before COVID.

But with refiners cranking up fuel output amid weaker demand, gasoline stocks have been rising in the U.S. over the past weeks, weighing on refiners’ profits for producing a barrel of gasoline.

Refinery utilization was at 95% in the week to June 7, compared to 93.7% at this time last year, and the highest seasonal since before COVID.

If demand was strong, this high rate of U.S. capacity in operation would be warranted. But demand is not strong—it’s weaker than last year. While gasoline demand has been rising since April, it is still trailing last year’s levels by around 150,000 bpd-200,000 bpd.

As a result, U.S. gasoline stocks have increased in each of the three weeks to June 7 and were at 233.5 million barrels then. This was an inventory build of 2.6 million barrels for the seven days to June 7, with production averaging 10.1 million bpd. To compare, the prior week saw an inventory build of 2.1 million barrels, while production stood at an average 9.5 million bpd.

If weak demand and rising stocks persist, U.S. refiners could reduce their utilization soon as their refining margins would be further eroded.

U.S. gasoline cracks were $21 per barrel lower in May, compared to the same month of 2023, and were at their lowest level since May 2021, according to data from Energy Intelligence.

Signs of improving demand are yet to be seen—for now, it’s lackluster despite falling gasoline prices.

According to GasBuddy data, U.S. gasoline demand in the week from June 9 to June 15 declined by 1.4% from the prior week and was 1.1% below the four-week average, Patrick De Haan, head of petroleum analysis at GasBuddy, said on Sunday.

Gasoline prices fell last week, again, due to lackluster gasoline demand and burgeoning supply, AAA said last Thursday.

“Gasoline demand has trailed 2023 for most of this year, and analysts believe economic uncertainty may suppress demand this summer,” AAA spokesperson Andrew Gross said.

“So, is the typical robust summer driving season a thing of the past? Or is gas demand just taking longer to pick up steam? We may not know until autumn.”

Source:Oilprice

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Samantha Luan

Economic

Stocks

Asian stocks gained after a rally in several large technology companies drove US stocks to another record high.

Benchmarks in Japan, South Korea and Australia all advanced, while Hong Kong and mainland Chinese equities edged lower. The S&P 500 has now set 30 all-time highs this year, defying concern about narrow breadth that may make the market more vulnerable to surprises.

Chinese shares dropped after Monday’s data dump showed the nation’s housing slump deepened in May, triggering new calls for the government to pump cash and credit into the economy. Declines in real estate investment and home prices both gathered pace last month. Asian Shares Follow Record-Breaking Wall Street: Markets Wrap_1

Asian Shares Follow Record-Breaking Wall Street: Markets Wrap_1

Australia’s central bank will keep its benchmark cash rate at a 12-year high of 4.35% for a fifth straight meeting Tuesday, according to a Bloomberg survey of economists. The nation’s 10-year bond yield climbed one basis point to 4.12%.

Ahead of Wednesday’s holiday in the US, traders geared up for retail-sales data and a slew of Federal Reserve speakers. Treasuries were little changed in Asia after falling Monday amid a flurry of high-grade corporate bond sales that exceeded $21 billion. The dollar weakened against most of its Group-of-10 peers.

“We do expect the dollar to remain pretty resilient on a short-term basis, largely because of the fact that, all the other central banks or the major central banks, like for example, the ECB will probably be cutting rates first,” Kelvin Tay, regional chief investment officer of UBS Global Wealth Management, said in an interview on Bloomberg Television

The US benchmark index topped 5,470 Monday, with Tesla Inc. and Apple Inc. leading gains in megacaps. The Nasdaq 100 came closer to the 20,000 mark as Micron Technology Inc. climbed to a record after some firms raised their targets.

“We believe the S&P 500 can reach 6,000 by year-end as the combination of better earnings and one or two rate cuts is like a turbo booster for stock prices,” said James Demmert at Main Street Research. “The Fed may not need to cut rates this year but if they do, it will be even more bullish for equities, particularly tech.” Asian Shares Follow Record-Breaking Wall Street: Markets Wrap_2

Asian Shares Follow Record-Breaking Wall Street: Markets Wrap_2

Optimism over a resilient economy, improving corporate earnings and the potential start of rate cuts have pushed US equities up about 15% this year. Fed Bank of Philadelphia President Patrick Harker said he sees one rate cut as appropriate for this year based on his current forecast.

Investors will keep a close watch on the implications of Beijing’s latest move in its trade tensions with Brussels, after China launched an anti-dumping probe on pork imports from the European Union. That comes as the bloc looks at Chinese subsidies across a range of industries and will impose tariffs on electric car imports from July.

In commodities, oil held the biggest advance in a week as risk-on sentiment in wider markets overshadowed a mixed outlook for crude. Gold was little changed.

Source:Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Glendon

Economic

XRP, the cryptocurrency associated with the Ripple blockchain network, has been a topic of intense interest and debate among crypto enthusiasts and investors alike. As of June 18, 2024, the XRP price stands at $0.48871610497157647, reflecting the latest real-time data from Tako Search. In this article, we'll delve into the current state of XRP, analyzing its price movements, market sentiment, and potential future outlook.

Recent Price Performance

XRP has experienced a volatile ride over the past few months, mirroring the broader cryptocurrency market trends. After reaching a high of $0.55 in early April, the price has since retreated, hovering around the $0.49 mark as of June 18th. This fluctuation can be attributed to a combination of factors, including regulatory uncertainty, competition from other cryptocurrencies, and overall market sentiment.

Regulatory Landscape and Ongoing Lawsuits

One of the key factors influencing XRP's price is the ongoing legal battle between Ripple, the company behind XRP, and the U.S. Securities and Exchange Commission (SEC). The SEC has accused Ripple of conducting an unregistered securities offering through the sale of XRP. This lawsuit has created uncertainty in the market and has been a significant overhang on XRP's price performance.

Despite the legal challenges, Ripple has remained committed to its global expansion plans, focusing on partnerships and use cases for its blockchain technology. The company has made significant strides in the cross-border payments space, with several financial institutions and payment providers adopting its solutions.

Market Sentiment and Adoption

The XRP community remains divided on the long-term prospects of the cryptocurrency. While some investors believe in Ripple's technology and its potential to revolutionize the financial industry, others are skeptical about the company's centralized approach and the ongoing legal issues.

However, it's important to note that XRP has a significant user base, with millions of wallets holding the cryptocurrency. The Ripple network has also seen an increase in transaction volume, indicating growing adoption in the remittance and cross-border payments space.

Future Outlook and Potential Catalysts

Looking ahead, the future of XRP will largely depend on the outcome of the SEC lawsuit and the company's ability to navigate the regulatory landscape. A favorable resolution to the legal battle could provide a significant boost to XRP's price and market sentiment.

Additionally, Ripple's continued efforts to expand its global footprint and drive adoption of its blockchain solutions could serve as potential catalysts for the XRP price. The company's partnerships with financial institutions and its focus on real-world use cases may help solidify XRP's position in the rapidly evolving cryptocurrency market.

Conclusion

The current XRP price reflects the ongoing challenges and uncertainties surrounding the cryptocurrency. While Ripple remains committed to its mission and continues to drive adoption of its blockchain technology, the SEC lawsuit and regulatory hurdles have created a challenging environment for XRP investors.

As with any investment, it's crucial to conduct thorough research, diversify your portfolio, and potentially seek professional guidance before making any decisions regarding XRP or other cryptocurrencies. The crypto market is known for its volatility, and investors should be prepared for potential price swings and risks associated with this asset class.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Glendon

Economic

Northrop Grumman Corporation (NOC) is a leading aerospace and defense contractor with a long history of innovation and contribution to national security. For investors considering a stake in the defense sector, NOC deserves a closer look. This comprehensive review dives into the company's financials, future prospects, and potential risks to help you make informed investment decisions.

Soaring High: A Look at NOC's Recent Performance

NOC has been a strong performer in recent years. As of June 20, 2024, the stock boasts a solid year-to-date increase, outperforming the broader market. This positive momentum reflects several factors:

Rising Defense Spending: Geopolitical tensions and a focus on national security are driving increased government spending on defense programs, benefiting major contractors like NOC.

Strong Earnings and Order Backlog: NOC consistently delivers impressive earnings reports, exceeding analyst expectations. The company also enjoys a healthy backlog of orders, ensuring revenue stability in the coming years.

Strategic Acquisitions: NOC has made strategic acquisitions to expand its capabilities and product offerings, positioning itself for future growth.

Under the Hood: Unveiling NOC's Business Segments

NOC operates across four primary business segments:

Defense Systems: This segment is the company's bread and butter, encompassing a wide range of military aircraft, combat vehicles, and missile systems. Notably, NOC is a major contributor to high-profile programs like the B-21 bomber and the MQ-4C Triton drone.

Mission Systems: This segment focuses on developing intelligence, surveillance, and reconnaissance (ISR) systems, cyber solutions, and command and control technologies. These capabilities are crucial for modern warfare and homeland security.

Space Systems: Leveraging its expertise in aerospace engineering, NOC manufactures satellites, launch vehicles, and spacecraft components. This segment plays a vital role in space exploration and national security.

Technology Services: This segment provides technical expertise and engineering support to various government agencies and defense contractors.

Analyst Outlook: Bullish with a Cautious Eye

Analysts hold a generally positive outlook for NOC, with a "Moderate Buy" consensus rating. The average analyst price target suggests an upside potential of over 18%, indicating confidence in future growth. However, some analysts express caution regarding potential headwinds like:

Defense Budget Scrutiny: With rising budget deficits, government spending on defense programs could face increased scrutiny in the future.

Competition: The defense industry is fiercely competitive, and NOC faces stiff competition from other major contractors.

Geopolitical Uncertainty: Global events can significantly impact defense spending priorities.

Investing in NOC: Weighing the Pros and Cons

Before investing in NOC, consider these factors:

Pros:

Strong industry position: NOC is a leader in the defense sector with a proven track record and a diverse portfolio.

Government contracts: Government contracts provide a steady stream of revenue and ensure long-term visibility.

Innovation: NOC invests heavily in research and development, ensuring a pipeline of future products and technologies.

Cons:

Cyclicality: The defense industry is cyclical, and NOC's performance can be impacted by changes in government spending priorities.

Valuation: NOC's stock price might already reflect its future growth prospects.

Geopolitical risks: Global events can significantly impact defense spending and project timelines.The Final Verdict: A Solid Investment for Long-Term Growth

Northrop Grumman Corporation presents a compelling opportunity for investors seeking exposure to the defense sector. The company's strong financials, diverse portfolio, and commitment to innovation position it for continued growth. However, understanding the potential risks associated with the defense industry and cyclical spending patterns is crucial. For investors with a long-term horizon and a tolerance for some risk, NOC could be a valuable addition to their portfolio.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites