PETALING JAYA: The consumer sector is expected to remain resilient into the fourth quarter of 2026 (4Q26), supported by steady employment, household assistance and seasonal spending.
However, consumption is likely to become increasingly selective as higher labour, food and logistics costs put pressure on household budgets and corporate margins.
MBSB Research retained a “positive” stance on the consumer sector for 4Q26 and preliminarily for 2027, noting that domestic consumption remains resilient, while Budget 2027 should provide further support to households.
“We expect Malaysia’s consumer sector to remain supported by a still-constructive domestic macro backdrop,” it said, adding that retail trade expanded 6.4% year-on-year (y-o-y) in July 2026, bringing seven-month 2026 growth to 6.8% y-o-y, while unemployment remained at 3% and headline and core inflation moderated to 1.8% y-o-y.
MBSB Research expects Budget 2027 to retain a rakyat-centric tilt through targeted cash assistance, Sumbangan Asas Rahmah (Sara)-related support, food credits and other cost-of-living measures, which should particularly benefit groceries, staples and value-oriented retail.
A potential increase in the minimum wage from RM1,700 towards RM1,900 a month could further support household incomes, although the benefit would be partly offset by higher payroll costs for labour-intensive retailers, food and beverage (F&B) operators and manufacturers.
MBSB Research also flagged rising input costs as a key earnings risk. In September 2026, wheat rose 37.1% y-o-y, soybean meal was up 26.7%, corn 24%, crude palm oil 13.8% and polyethylene terephthalate (PET) resin 53.2%, while the Shanghai Containerised Freight Index surged 183.7% y-o-y.
The brokerage favours companies with defensive demand, scale, procurement advantages and pricing flexibility.
Its top picks are 99 Speed Mart Retail Holdings Bhd
, with a target price of RM4.37, Leong Hup International Bhd at RM1.03 and Nestle (Malaysia) Bhd at RM116.10.
It explained that 99 Speed Mart remained its “clearest exposure” to value and essential retail, while Leong Hup offered exposure to affordable protein demand and Nestle benefits from brand strength, procurement scale and pricing power.
Apex Securities, meanwhile, maintained a “neutral” stance on the sector, saying targeted household assistance should support consumption but could be offset by higher labour costs, potential sin-tax increases and further subsidy rationalisation.
It expects Sara allocation to rise to around RM17bil in 2027 from RM15bil, but sees spending growth becoming increasingly selective.
“We expect Malaysia’s consumer sector to remain resilient over the next six months, but see consumption growth becoming increasingly selective,” Apex Securities said.
It added that consumers are likely to remain value-conscious and favour essentials and affordable F&B over big-ticket discretionary purchases.
For Budget 2027, Apex Securities sees the minimum wage, tobacco and sugar taxes, and subsidy rationalisation as key watch-points.
It expects a more modest minimum-wage outcome, broadly in line with the 2025 revision, while further sugar-tax expansion could raise costs for F&B operators.
