-  Malaysia’s exports grew by 8.4% YoY to RM65.03bil in March. This compares to our and consensus estimates of 11.6% and 9.2% respectively.

-  The overseas shipment of E&E had advanced by 6.2% to RM20.95bil. Meanwhile, exports of non-E&E products grew by 9.4% YoY to RM44.07bil.

-  In terms of commodities, note that shipments of palm oil increased by 4.0% YoY to RM3.78bil while crude petroleum contracted by 6.6% to RM2.81bil.

-  Meanwhile, Malaysia’s exports to China had contracted for the first time since June 2013. We note that exports to China fell by 1.8% to RM7.79bil due to lower export of commodities.

-  Similarly, exports to Japan had contracted by 0.9% to RM7.3bil as a result of lower exports of crude petroleum and liquefied natural gas.

-  Aside from that, exports to the US and EU registered softer growth rates in March. Exports to the US advanced by 5.2% while export to EU soared by 14.1%.

-  That said, stronger exports to ASEAN countries had offset some of the losses in exports to other parts of the world. Exports to ASEAN expanded by 10.9% to RM18.47bil (vs. 5.7% YoY in February).

-  Within the ASEAN basin, Singapore led the pact with 14.4% contribution to total exports. Total shipments to Singapore grew by a healthy 17.5% to RM9.36bil.

-  Meanwhile, weaknesses in imports suggest that overseas shipment will probably slow down in the coming months. Overall import grew by 0.5% YoY to RM55.43bil in March.

-  As such, total trade advanced by 4.6%. On the other hand, trade balance registered a considerable surplus of RM9.59bil in March (February: +RM10.44bil).

-  All in all, GDP growth in 1Q14 was probably bolstered by the relatively strong net trades. In nominal terms, net trades registered a healthy surplus of RM26.39bil in 1Q14. On a YoY basis, trade surplus improved by 61.4% (or +RM10.04bil).

-  Based on the latest trade statistics, we envisage net exports contribution to real GDP at 7.9% in 1Q14. Note that trade balance had contributed 6.3% to GDP in 2013.

-  Going forward, rising exports is expected to remain supportive of growth. In nominal terms, trade surplus could amount to RM104.2bil in 2014 (2013: RM70.63bil).

-  Ahead of 4Q13 GDP release on 16 May, we expect the Malaysian economy to grow by 5.2% in 1Q14 on the back of a healthy trade surplus (4Q13: +5.1%). Our full-year GDP projection for 2014 is 5.1% (2013: +4.7%). 

Source: AmeSecurities