Consumer players in for more disappointment as Q2 results roll in

Due to sluggish retail sales.

Consumer-oriented stocks are in for more disappointment in Q2 on back of the region’s uninspiring retail sales.

According to a report by OCBC, weakening consumer spending in key markets like Indonesia, Hong Kong and China spell trouble for stocks like Petra, BreadTalk, and Osim.

“Retail sales survey by Bank Indonesia suggests weakening consumer spending, and despite some optimism from BI for a better 2H15, a pick-up in 2Q seems unlikely and there is room for further disappointment. The retail sector in HK will likely see weak tourist spending in the near term amid tighter regulations and inherent economy slowdown in China. For China, retail sales growth in May was lower at 10.1% vs. an average growth rate of 12% for 2014,” said the report.

“Performance from the consumer indices, FTSE Consumer Goods (FSTCG) and FTSE Consumer Services (FSTCS) remain muted with YTD returns of -1.2% and -3.9% respectively vs. the FSSTI of -0.5%. We are still neutral on the sector as we look to a better 2H with regional growth driven by government reforms, and opt to stick to our preferred picks Thai Beverage for its market dominance and defensive Sheng Siong Group,” the report added.