-  Malaysia’s exports reverted to growth in July after five consecutive months of contraction. Exports grew by 4.5% YoY (or +7.0% MoM) to RM60.73bil vs. ours and street estimates of -1.9% YoY and +0.3% respectively (June: -6.9% YoY). On the other hand, imports had increased by 6.2% YoY (or +10.4% MoM). However, net trades had deteriorated to RM2.86bil from RM4.32bil in June owing to the stronger rebound in imports.

-  The export of manufactured goods which represented 69.4% of total exports, had recorded a growth of 4.5%. Particularly, the E&E segment alone accounted for 34.3% of total exports and had rebounded by 6.0% YoY to RM20.82bil in July (June: -5.6%).

-  Among the export of major commodities, we note that shipments of LNG and crude oil had advanced by 67.8% and 10.5% YoY respectively (or representing 8.6% and 3.3% of exports) in July. On the other hand, the exports of palm oil had declined by 15.4% YoY (or contributed 6.0% to total exports).

-  In terms of the various export destinations, exports to ASEAN countries surged by 1.9% to RM17.51bil, accounting for 28.8% of Malaysia’s total exports in July. Other major export countries include China, Japan, US and Hong Kong that contributed a collective 37.7% to exports during the month.

-  As for the imports segment, we attribute its increase to higher imports of intermediate goods (+1.6% YoY); capital goods (+8.3%) and consumption goods (+10.6%). About 27% of imported goods are from ASEAN countries. Other large import markets for Malaysia include China (17.3% of total imports), Japan (8.4%), and the US (7.5%).

-  On a YTD basis, total exports fell by 2.6% YoY while imports expanded by 4.6%. On a net basis, total trade balance had registered a surplus of RM27.44bil. Mainly, the YTD decline in exports was contributed by the fall in exports to most major markets including the US, Japan, China and the EU.

-  Contrastingly, domestic demand within ASEAN economies remained strong in 1H13. Exports to ASEAN countries had registered a YTD growth of 4.5% led by higher exports of refined petroleum products, E&E products (electronic integrated circuits), and manufactures of metal.

-  Despite the monthly rebound in exports, we do not anticipate net trades to have a significant contribution to GDP growth in 2013. However, Malaysia’s shipments abroad will benefit from the improved global outlook as the US economy gains traction coupled with a more stable growth in China.

Source: AmeSecurities