Brokers' take

Consumer sector | Neutral OCBC Investment Research, March 14

RETAIL sales print for Singapore in January this year might have seemed positive at a cursory glance, as retail sales were up 2 per cent year on year even excluding motor vehicle sales. In particular, supermarkets and F&B sales were up 13 per cent and 12 per cent respectively.

Discretionary sales growth was also positive when looking at performance of department stores (+3.2 per cent) and watches and jewellery (+4.7 per cent). On the other hand, we believe retailers continue to face high operating costs, especially from labour and rent. Nielsen's consumer confidence index for Singapore in Q4 2016 was also down two points quarter to quarter to 86, suggesting general sentiments were still in the pessimistic territory (levels below 100).