-  Regional economies posted weaknesses in exports during the month of May. Japan’s exports fell for the first time in 15 months on weak demand from the US and Asia. Elsewhere, Singapore’s exports unexpectedly dropped on weak shipments of electronics and pharmaceuticals to its major export markets.

-  Having said that, we note that global imports continue to grow in advanced economies. Singapore boosted imports by 2.1% YoY in May, the US increased imports by 5.3% in April, and EU had registered an import growth of 0.4% in March.

-  As such, weak shipments to Japan and China during the month of May will likely be compensated by the boost in exports to the US, Singapore, and the EU. In April, Malaysia’s exports to the US/ Singapore/ EU had advanced by 17.1%/ 11.5%/ 20.7% respectively. Meanwhile, Malaysia’s exports to China and Japan surged by 13.1% and 16.5% YoY respectively in April.

-  During the month of May, we expect Malaysia’s exports to the US, EU, and ASEAN to remain strong. Notwithstanding slackened demand in China and Japan, Malaysia’s exports will likely advance by 12.5% YoY, imports to post a moderate growth of 2.8%, and trade balance to register a healthy surplus of RM8.4bil in May. 

Source: AmeSecurities