-  Malaysia’s exports in August surpassed expectations by registering an astounding growth of 12.4% YoY (or +3.6% MoM) to RM62.9bil. This exceeded ours and street estimates of +4.9% and +4.7% YoY respectively (July: +4.5% YoY). On the other hand, imports increased by 14.1% YoY (or +7.2% MoM) to RM55.79bil. With that, net trades registered a surplus of RM7.11bil as compared to RM2.86bil in July.

-  We gather that overseas shipment of E&E had advanced by 8.2% YoY to RM20.7bil in August (July: +6.0%). Aside from that, refined petroleum products amounted to RM6.64bil in August, which is a growth of 92% YoY (or +42% MoM). Among the major commodities, shipments of LNG and palm oil contracted by 3.2% and 9.8% YoY respectively (or representing 8.1% and 6.3% of exports) in August. Meanwhile, exports of crude oil increased by 19.3% YoY (or +17.4% MoM) to RM2.37bil.

-  In terms of the various export destinations, exports to ASEAN countries surged by 26.7% to RM17.68bil (or accounting for 28.1% of Malaysia’s total exports in August). Among the ASEAN economies, major export markets that contributed to growth include Singapore, Thailand and Indonesia. Aside from ASEAN countries, exports to China (+21.3%), Australia (+37.7%), Taiwan (+11.8%) and EU (20.4%) also advanced during the month. Meanwhile, exports to the US had fallen by 4.2% YoY to RM5.0bil (or constituting 7.9% to exports in August).

-  As for the imports segment, we attribute its increase to all three major imports including intermediate goods (+3.1% YoY), capital goods (+3.2%) and consumption goods (+0.3%). Imported goods were mainly from ASEAN countries which account for 25.2% of total imports during the month.

-  On a YTD basis, total exports fell by 0.8% YoY while imports expanded by 5.8%. As such, total trade balance had registered a surplus of RM34.55bil as compared to a surplus of RM61.79bil during the corresponding period of 2012. The YTD decline in exports was contributed by the fall in shipments to Japan and the US which contracted by 6.9% and 4.9% YoY respectively. In terms of export products, we note that the drag came from several key segments including E&E (-1.5% YoY), crude oil (-7.6%) as well as palm oil (-20.1%).

-  Meanwhile, overall exports to the EU registered a marginal growth of 0.02% to RM41.51bil as of YTD led by the increase in the exports of E&E products (data processing equipment as well as electric control panels and parts), refined petroleum products and transport equipment. Likewise, shipments to China registered an expansion of 0.4% to RM59.03bil. Higher exports were recorded for manufactures of metal, chemicals and chemical products (hydrocarbons and their derivatives) as well as LNG.

-  ASEAN economies had contributed a significant 28.7% (or RM132.37bil) to Malaysia’s exports growth as of YTD. Exports to ASEAN countries grew by 7.0% led by the exports of refined petroleum products, E&E products (electronic integrated circuits) and manufactures of metal. Singapore is a major export market within the ASEAN region as it accounted for about 14.4% of Malaysia’s total exports as of YTD (or +5.8% YoY).

-  Improvements in exports and net trades during 3Q13 will facilitate the recovery in current account balance during the quarter. However, the sluggish exports performance during 1H13 and the potential slack in global trade in 4Q13 will remain a drag to the economy. We note that the contribution of net trades to GDP has been on a declining trend. For the full year of 2013, GDP contribution from net exports will likely account for less than 6.0% of GDP (vs. 8.5% of GDP in 2012). Note that net trades used to contribute more than 20% to overall GDP in 2005.

Source: AmeSecurities