Malaysia’s trade started 2018 on a high note with exports accelerating in January, printing a double-digit growth of 17.9% y/y, from a sluggish 4.7% y/y in December. We also noticed import growth moving in tandem with exports, climbing 11.6% y/y from 7.9% y/y previously. Hence, the trade surplus in January rose a staggering 10.4% y/y to RM9.7 billion. Thus, we reiterate our exports projection to grow around 8.5% to 9.5% for 2018, partly affected by the base effect while we expect the overall GDP to expand by 5.5%. Underpinned by stronger global growth, which we forecast at 3.6%, and added with 4.0% global export volume, these should continue to support our exports positively.

• Malaysia’s trade started 2018 on a high note with exports accelerating in January, printing a double-digit growth of 17.9% y/y, from a sluggish 4.7% y/y in December. We also noticed import growth moving in tandem with exports, climbing 11.6% y/y from 7.9% y/y previously. Hence, the trade surplus in January rose a staggering 10.4% y/y to RM9.7 billion.

• The strong pick-up in exports continued to be driven by the electrical & electronics segment, up 27.1% y/y compared to 4.7% y/y in Dec 2017. This segment sits at the pole position in Malaysian exports as it accounts for 38.2% of total exports. Besides, other segments such as palm oil, refined petroleum products, and timber products continued to grow at a healthy pace of 10.4% y/y, 2.1% y/y and 2.6% y/y respectively.

• Meanwhile, imports in January were largely supported by consumption goods, which rebounded to 9.8% y/y from a fall of 2.5% y/y in the month prior. We believe the rise in consumption goods was due to the stronger ringgit coupled with rising consumer sentiment. However, intermediary and capital goods registered a negative growth of 1.7% y/y and 3.1%y/y respectively.

• Thus, we reiterate our exports projection to grow around 8.5% to 9.5% for 2018, partly affected by the base effect while we expect the overall GDP to expand by 5.5%. Underpinned by stronger global growth, which we forecast at 3.6%, and added with 4.0% global export volume, these should continue to support our exports positively. Also with a stronger ringgit outlook, we expect imports to remain healthy.

Source: AmInvest Research - 6 Mar 2018