-  Malaysia’s exports slowed drastically to +0.6% YoY, or totalling RM61.12bil in July owing to weak external demand (June: +7.9%).

-  The overseas shipment of E&E fell for the first time since June 2013 to register -1.0% YoY to RM20.61bil (June: +5.6%). Meanwhile, exports of non-E&E products grew by 1.5% to RM40.50bil (June: +9.1%).

-  Shipments of palm oil advanced by 10.9% to RM4.05bil (June: +4.2%) while crude petroleum surged by 26.2% to RM2.55bil (June: +24.5%).

-  In terms of export markets, the drag in exports was mainly attributable to the decline in shipments to China, Japan, Thailand and Indonesia.

-  Owing to slower demand in China, Malaysia’s exports to China had posted a decline for the third consecutive month to register -14.4% YoY totalling RM7.07bil in July (June: -1.9%).

-  Meanwhile, exports to Japan contracted by 22.1% to RM5.56bil as a result of weaker exports of LNG and crude petroleum (June: -2.6%).

-  Aside from that, exports to the US and EU had improved by 4.5% and 8.9% YoY, respectively. These compare to June’s exports growth for the US and EU of 9.5% and 4.0%, respectively.

-  Within the region, exports to ASEAN slowed in July to register a growth of 1.7% totalling RM17.81bil (June: +9.6%).

-  Mainly, shipments to Singapore grew by a healthy 16.6% to RM9.88bil, which accounted for 16.2% of total exports in July (June: +6.4%).

-  Meanwhile, imports contracted by 0.7% to RM57.48bil, driven by the decline in capital and consumption goods (June: +8.9%).

-  As such, total trade amounted to RM118.60bil, which was unchanged from a year ago (vs. +8.4% in June). Trade balance had also moderated to RM3.64bil in July from RM4.1bil in June.

-  On a YTD basis, total trade grew by 8.4% YoY driven by the advancement in exports of 10.7% and imports growth of 5.8%.

-  Malaysia’s trade segments are expected to be weaker in 2H14 compared to 1H14 on the back of the slowdown in global demand.

-  Cumulatively, net trades had accelerated by 76.6% YoY to RM48.45bil as at end-July. For the full year, we envisage Malaysia’s trade balance to register a surplus of RM83.7bil in 2014 (2013: RM70.63bil).

Source: AmeSecurities