SINGAPORE (Oct 16): Retail sales in Singapore saw a 3.5% y-o-y in August, above consensus of 2.4%, on a headline basis, according to Credit Suisse.

Retail sales, excluding motor vehicles, also saw a 3.7% y-o-y increase in August, compared to a 2.2% increase in July.

In a Friday report, analyst Gerald Wong says, “We believe this supports our view that private consumption could surprise positively as export strength and improving property sentiment lead to a recovery in retail sales.”

The improvement in retail sales remains broad-based, as nine out of 13 segments reported y-o-y growth in August.

In 2Q17, recreational goods, medical goods & toiletries as well as clothes & footwear saw the highest increase in sales, while books, food & beverage, convenience stores along with watches & jewellery saw a decline.

Furthermore, the launch of Amazon Prime in Singapore was a concern to brick-and-mortar stores.

See: Amazon announces launch of Prime Now in Singapore

Despite this, retail sales by supermarkets shot up 6.8% y-o-y in August, recording the highest y-o-y increase since 2013.

See: Amazon stymied by Singaporeans' love for shopping

Meanwhile, property analyst Louis Chua expects the recovery in the residential property market to be sustained, as rising land bids and revival of en-bloc market drive higher prices and transaction volumes in 2018.

Hence, REIT analyst Nicholas Teh believes that the broad-based recovery in retail sales will drive the recovery of CapitaLand Mall Trust’s (CMT) negative rent reversions and allay concerns that negative reversions could accelerate.

Credit Suisse has picked Frasers Centrepoint Trust (FCT) and Mapletree Commercial Trust (MCT) as its top “outperform” stocks, with target prices of $2.18 and $1.73 respectively, which will be beneficiaries of an improvement in retail sales.

As at 11.07am, units in CMT, FCT and MCT are trading at $2.07, $2.20 and $1.56 respectively.