KUALA LUMPUR, April 3 — Headwinds from the West Asia conflict are expected to be eased by fiscal support, including Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA), a stronger ringgit, and resilience in food and beverage spending, said Kenanga Investment Bank Bhd (Kenanga IB).
Essential spending is taking priority, and consumption is likely to remain skewed towards necessities in the near term, resulting in softer discretionary spending should cost pressures intensify.
“This aligns with our in-house view that inflation could trend higher amid the West Asia conflict, with our calendar year 2026 inflation forecast revised to 2.1 per cent from 1.9 per cent.
“While energy subsidies and a stronger ringgit should continue to anchor prices, potential disruptions to oil and fertiliser supply chains may lift food and transport costs, thereby eroding household purchasing power,” it said in a research note.
From a portfolio perspective, Kenanga IB said heavyweight names remain broadly neutral.
However, it is selectively positive on specific counters with better earnings resilience, defensive, essentials-led exposure, strong fundamentals, and value-oriented positioning.
Kenanga IB added that, as such, consumption remains resilient, but spending remains cautious and selective, with consumers prioritising essential and value-for-money purchases.
This is reflected in full-year sub-sector trends, where mini-markets and convenience stores outperformed (+13 per cent), while more discretionary segments such as furniture, home improvement, and electrical goods contracted (-10 per cent), indicating continued deferment of non-essential spending.
