HLBank Research Highlights

Author: HLInvest   |   Latest post: Fri, 24 May 2019, 10:25 AM


Economics - Slowdown in Exports

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Exports moderated sharply to +1.6% YoY (Oct: +17.7% YoY), falling short of the +6.6% YoY consensus estimate, while imports moderated to +5.0% YoY (Oct: +11.4% YoY). The slower exports growth was driven by moderation in commodity exports and decline in manufactured exports. Imports moderated on account of decline in intermediate goods and deceleration in consumption goods which offset the marginal rebound in capital goods. Consequently, the trade surplus narrowed to RM7.6bn (Oct: RM16.3bn).


Exports moderated sharply to +1.6% YoY (Oct: +17.7% YoY) which fell short of the +6.6% YoY consensus estimate. Imports moderated to +5.0% YoY (Oct: +11.4% YoY). As a result, the trade surplus narrowed to RM7.6bn (Oct: RM16.3bn). The slowdown in exports is in line with regional trend.

Exports to major countries were lower, with sharp moderations in exports to China (+3.9% YoY; Oct: +33.0% YoY) and ASEAN (+6.4% YoY; Oct: +16.0% YoY). Exports to US (-3.6% YoY; Oct: +7.7% YoY), EU (-7.7% YoY; Oct: +8.5% YoY) and Japan (- 8.9% YoY; Oct: +10.1% YoY) contracted.

Commodity-related exports moderated to +13.7% YoY (Oct: +18.1% YoY). Export volume of refined petroleum products rose (+15.9% YoY; Oct: +6.8% YoY). Export volume of LNG (+4.2% YoY; Oct: +7.2% YoY) and palm oil products (+1.4% YoY; Oct: +6.3% YoY) moderated while export volume of crude petroleum continued to decline (-11.9% YoY; Oct: -4.4% YoY). Average unit value (AUV) for refined petroleum products held at +28.6% YoY. AUV for LNG moderated (+21.3% YoY; Oct: +29.5% YoY) while palm oil products declined (-19.7% YoY; Oct: -17.1% YoY). Nevertheless, AUV for crude petroleum rebounded by +3.6% YoY (Oct: -12.3% YoY).

Exports of manufactured goods recorded a reversal, declining by -1.8% YoY (Oct: +17.6% YoY) on account of a fall in E&E (-1.7% YoY; Oct: +23.3% YoY), machinery (- 0.4% YoY; Oct: +4.1% YoY) and metal exports (-3.5% YoY; Oct: +29.0% YoY) while chemical exports moderated to +15.1% YoY (Oct: +36.5% YoY). E&E exports declined for the first time since February 2018, due to softer demand from major countries like the US. This was also in line with slower growth in global semiconductor sales (+9.8% YoY; Oct: +12.7% YoY).

Imports moderated to +5.0% YoY (Oct: +11.4% YoY) due to a sharp deceleration in consumption goods (+0.9% YoY; Oct: +7.6% YoY) and decline in intermediate goods (-0.3% YoY; Oct: +1.0% YoY) which offset the marginal rebound in capital goods (+0.4% YoY; Oct: -1.6% YoY). Consumption imports decelerated on account of a fall in semi-durable goods. Intermediate imports fell particularly due to lower imports of electrical machinery, equipment and parts. Meanwhile, the rebound in capital imports was attributed to higher imports of transport equipment for industrial use, particularly aircraft.


Going forward, trade activity is anticipated to face headwinds from continued trade dispute between China and US as it affects sentiment and business activity. Ris ing volatility in the financial market also remains a key downside risk to trade activity.

Source: Hong Leong Investment Bank Research - 7 Jan 2019

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