Exports and imports continued to perform strongly, resulting in a trade balance of RM9.9bil in August. While exports rose 21.5% y/y supported by E&E and manufactured goods, imports grew 22.6% y/y on the back of steady intermediate imports. We reiterate our 21% full-year export growth despite envisaging slower exports to some degree in 4Q2017 due to a high base. Apart from continued demand from our major trading partner and a low base, we foresee exports benefiting from the undervalued MYR. In terms of real effective exchange rate, the MYR is undervalued by 8.4%.

• Exports and imports continued to perform strongly. In August, exports surged by 21.5% y/y to RM82.2bil (US$19.41bil) from 30.9% y/y while imports rose 22.6% y/y from 21.6% y/y in July. Trade balance improved further to RM9.9bil in August from RM8.0bil in July.

• Our trade mainly came from strong exports to China with a 21.2% y/y gain to RM11.3bil, the highest monthly value ever recorded thus far. The growth was due to a higher uptake of petroleum products, manufactures of metal, chemicals and chemical products, E&E products and rubber products.

• On the back of strong exports to China, the overall electrical and electronic (E&E) exports segment recorded a high of RM31.04bil or 20.1% y/y gain in August. It supported manufactured goods exports with a robust growth of 22.3% y/y. Also, we found strong growth from the exports of chemicals and chemical products (+15.7% y/y), petroleum products (+33.6% y/y) and liquefied natural gas (+101.8% y/y). However, palm oil and palm oil-based agriculture products exports fell 8.9% y/y.

• We reiterate our 21% full-year export growth despite envisaging slower exports to some degree in 4Q2017 due to a high base. Apart from continued demand from our major trading partner and a low base, we foresee exports benefiting from the undervalued MYR. In terms of real effective exchange rate, the MYR is undervalued by 8.4%.

Source: AmInvest Research - 9 Oct 2017