Exports and imports continued to perform favourably with exports up 18.9% y/y in October, the fourth consecutive month of double-digit growth supported by continued healthy performance by E&E (+16.4% y/y), added with petroleum products (+21.4% y/y), chemical & chemical products (+17.5% y/y), and manufacture of metals (+38.0% y/y). Meanwhile, imports gained 20.9% y/y in October coming from strong intermediate (+14.8% y/y) and consumption (+11.1% y/y) with capital up 5.1% y/y. Trade balance in October surged to RM10.6bil from RM8.6bil in September. We expect the economy to continue performing strongly in 4Q2017, with our preliminary estimates at 6.0%. We are currently looking at the full-year 2017 GDP of 5.9%. Growth will be supported largely by exports on the back of an improving external demand and the cheap ringgit. The Malaysian currency is trading at a discount to its fair value which we are projecting at 3.95 against the USD based on our fundamental analysis and 3.76 against the REER. Besides, the healthy growth trend from imports i.e. intermediate and capital goods climbing 23.1% y/y and 13.7% y/y YTD respectively, suggests that the GDP growth momentum remains healthy in 2017.

• Exports and imports continued to perform favourably. In October, exports rose by 18.9% y/y from 14.8% y/y in September, the fourth consecutive month of double-digit growth. Meanwhile, imports gained 20.9% y/y in October from 15.2% y/y in September. Trade balance in October stood at RM10.6bil from RM8.6bil in September.

• Healthy exports performance continued to be supported by the electrical and electronics (E&E) sector which rose by 16.9% y/y in October from 17.7% y/y in September. We expect this segment to continue performing favourably underpinned by a healthy external demand. Besides, exports are also being supported by petroleum products (+21.4% y/y), chemical & chemical products (+17.5% y/y), and manufacture of metals (+38.0% y/y).

• We reiterate our 21% full-year export growth despite envisaging slower exports in 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. We expect the USD/MYR to average at 4.31–33 for 2017.

• We expect the economy to continue performing strongly in 4Q2017, with our preliminary estimates at 6.0%. We are currently looking at the full-year 2017 GDP of 5.9%. Growth will be supported largely by exports on the back of an improving external demand and the cheap ringgit. The Malaysian currency is trading at a discount to its fair value which we are projecting at 3.95 against the USD based on our fundamental analysis and 3.76 against the REER. Besides, the healthy growth trend from imports i.e. intermediate and capital goods climbing 23.1% y/y and 13.7% y/y YTD respectively, suggests that the GDP growth momentum remains healthy in 2017.

Source: AmInvest Research - 7 Dec 2017