KUALA LUMPUR (Jan 14): Malaysia’s retail outlook remains bright as 2026 kicks off, MBSB Research said, citing a firmer footing for domestic spending, easing inflation pressures and a more favourable input.

In a note issued on Wednesday, MBSB Research said anchored by a tight labour market and manageable inflation, government cash aid like Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah will continue to help people spend, especially on daily necessities and mass-market goods. At the same time, lower pressure on key commodity prices helps keep costs from rising too much.

On top of that, more tourists and local travel from Visit Malaysia 2026 means more people moving around and spending — which is good news for retailers, fast moving consumer goods brands, and food and beverage businesses.

The research house said unemployment fell to an 11-year low of 2.9% in November, while inflation remained contained at 1.4% year-on-year, supporting purchasing power even as retail activity normalised sequentially.

It said retail sales expanded +6.0% year-on-year to RM741.22 billion for the first 11 months of 2025, underscoring sustained household consumption momentum, albeit with signs of normalisation before the holiday season in December. 

Commodity prices in December 2025 were also lower than a year ago, which helped reduce production costs for consumer goods companies.

At the same time, the ringgit strengthened to an average of 4.09 against the US dollar, making imports cheaper. MBSB Research said this is good for consumer producers that rely on imported raw materials, as it lowers costs and makes profits more predictable.

Against this backdrop, MBSB pinned Mr DIY Group (M) Bhd (KL:MRDIY) with a target price of RM1.66, AEON Co (M) Bhd (KL:AEON) with a target price of RM2.20, and Leong Hup International Bhd (KL:LHI) with a target price of 90 sen, as its top picks. 

It said Mr DIY is in a strong position to benefit from everyday consumer spending, lower sourcing costs, and its wide, diversified retail network. AEON should benefit from steady mall foot traffic and reliable income from its property management services. While Leong Hup provides a defensive play, supported by consistent demand for staple protein and manageable animal feed costs.