HLBank Research Highlights

Author: HLInvest   |   Latest post: Fri, 24 Sep 2021, 10:06 AM


Economics - Positive Exports Momentum Continues

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Exports continued to post double-digit growth, albeit at a slower rate of +27.2% YoY in Jun (May: +47.0% YoY), faring better than the consensus estimate of +11.0% YoY. Growth was mostly contributed by petroleum products, E&E and rubber products. Imports also moderated to +32.1% YoY (May: +48.4% YoY) following slower growth across capital, intermediate and consumption imports. Trade surplus widened to RM22.2bn (May: RM13.6bn).


Exports continued to post double-digit growth of +27.2% YoY in in Jun (May: +47.0% YoY), faring better than the consensus estimate of +11.0% YoY. Imports moderated to +32.1% YoY (May: +48.4% YoY). On a monthly basis, momentum of exports and imports rebounded by +14.3% (May: -12.6%) and +5.9% (May: -7.8%) respectively. Consequently, trade surplus widened to RM22.2bn (May: RM13.6bn).

Exports growth to all major markets remained robust. Growth of exports to China picked up by +18.5% YoY (May: +17.7% YoY) to RM17.6bn, the highest value on record. The expansion was mainly driven by E&E and petroleum products. Exports to other major markets also continued to record double-digit growth, but at a more moderate pace; US (+32.0% YoY; May: +46.5% YoY), EU (+24.1% YoY; May: +33.5% YoY), ASEAN (+22.7% YoY; May: +49.4% YoY) and Japan (+17.8% YoY; May: +52.6% YoY).

Despite the slight moderation in commodity-related exports (+78.9% YoY; May: +82.3% YoY), this category contributed the most to overall exports growth (+15.0ppt). Exports of petroleum products surged by +113.6% YoY (May: +75.1% YoY), while crude petroleum (+109.5% YoY; May: +141.0% YoY) and rubber products (+103.5% YoY; May: +133.2% YoY) continued to post triple-digit growth. Palm oil products (+51.0% YoY; May: +60.5% YoY) and LNG (+12.4% YoY; May: +45.2% YoY) recorded more moderate growth rates.

Manufactured exports contributed +12.2ppt to overall exports growth (+15.1% YoY; May: +37.7% YoY), led by E&E products (+5.6ppt, +14.1% YoY; May: +34.3% YoY). This is followed by chemical exports (+53.3% YoY; May: +42.5% YoY), manufactures of metal (+34.0% YoY; May: +81.6% YoY) and optical & scientific equipment (+7.6% YoY; May: +29.2% YoY), which offset the decline in machinery, equipment & parts (- 1.4% YoY; May: +36.8% YoY).

Meanwhile, imports moderated to +32.1% YoY (May: +48.4% YoY) following slower growth across capital (+15.2% YoY; May: +33.9% YoY), intermediate (+25.3% YoY; May: +52.4% YoY) and consumption imports (+19.2% YoY; May: +37.6% YoY).

In 2Q21, exports and imports accelerated to +44.0% YoY (1Q21: +18.0% YoY) and +33.3% YoY (1Q21: +10.0% YoY) respectively.


On the global manufacturing front, new export orders PMI has eased to 53.2 (May: 54.9), indicating a moderation in global trade growth as the broader economic reopening in advanced economies set off a gradual shift in demand from goods to services. While the robust external demand and ramp-up in vaccination rates offers some reprieve to Malaysia’s economy, the reopening timeline hinges on the success in containing the spread of the virus and its more transmissive variants, as well as alleviating the strain on healthcare facilities across states.

Source: Hong Leong Investment Bank Research - 29 Jul 2021

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