Both our exports and imports continued to perform favourably with November’s exports up for the 12th consecutive month at double digits by 20.4% y/y while imports gained 21.2%% y/y, bringing the November’s trade balance at RM9.9bil. We remain upbeat on the economic performance in part due to strong imports and capital (+12.2% y/y) and intermediate goods (+13.8% y/y) which act as an injection to the overall economic activity. Besides, we foresee exports will continue to aid the overall economic activity.

Henceforth, we believe the domestic economy will continue to perform strongly with our preliminary estimates showing the 4Q2017 GDP should be around 6.0% with our full-year 2017 at 5.9% and exports to grow by 21% y/y in 2017. For 2018, our GDP outlook is 5.5% supported by domestic activities with exports to grow around 5%–6% in 2018 partly due to a high base. We expect the USD/MYR to remain on a strong note with our end-period projection at 3.95 which is our base case and best case is at 3.76. Our full-year average outlook for the USD/MYR is 4.00–4.02 as our base case and best case at the 3.80–82 levels.

• Exports and imports continued to perform favourably. In November, exports rose by 20.4% y/y from 14.4% y/y in October, the 12th consecutive month of double-digit growth. Meanwhile, imports gained 21.2%% y/y in November from 15.2% y/y in October. Trade balance in November stood at RM9.9bil from RM10.6bil in October.

• The electrical and electronics (E&E) segment of exports continued to expand strongly by 21.0% y/y in November from 16.9% y/y in October. This segment is envisaged to perform robustly, benefitting from the cyclical growth underpinned by a healthy external demand. Also, we noticed exports are being supported by chemical & chemical products (+20.2% y/y), and manufacture of metals (+20.8% y/y) while petroleum products grew 1.2%y/y. Besides, export volume grew strongly by 9.7%y/y in November.

• We remain upbeat on the economic performance. This is in part is due to the healthy imports with capital imports up 12.2% y/y, the fastest in 4 months while intermediate imports expanded by double-digit pace for 11th consecutive months by 13.8% y/y. The robust expansion in capital and intermediate imports falls in line with the 43-month high of the Purchasing Manufacturing Index which read at 52 points in November.

• Henceforth, we believe the domestic economy will continue to perform strongly in 4Q2017. Our preliminary estimates show the 4Q2017 GDP should be around 6.0% with our full-year 2017 at 5.9%. Growth will be supported largely by exports which we project would grow by 21% y/y in 2017.

• We project the domestic economy would expand around 5.5% in 2018 supported by domestic activities and export which we foresee should grow around 5%–6% in 2018 partly due to a high base. Meanwhile, our USD/MYR outlook for 2018 remains on a strong note. Our end-period projection for the local currency is 3.95 against the USD which is our base case and best case is at 3.76. As for the full-year average, the USD/MYR is projected at 4.00–4.02 which is our base case and best case is at the 3.80–82 levels.

Source: AmInvest Research - 8 Jan 2018