- Exports grew further in September. Overseas shipment expanded by 8.8% YoY to RM70.2bil in September (August: +4.1% YoY). In part, the weak Ringgit currency remained supportive of exports growth during the month. Ringgit fell further to an average of 4.31 per USD in September vs. 4.06 in August. Exports were driven by most export products except commodities including crude petroleum (-12.2% YoY), LNG (-33.3%), petroleum products (-10.1%) and palm oil (-7.3%). Mostly, the exports growth was supported by E&E, which surged by 13.6%.

- Imports reversed from contraction to growth. Total imports advanced by 9.6% to RM60.5bil in September (August: -6.1%). Both capital (+29.9% YoY) and consumption goods (+43.2%) grew sharply. On the other hand, intermediate imports fell at a narrower pace of -6.5%. For the capital goods, the increase was attributable to higher imports of cellular phones. Meanwhile, imports of consumer goods were driven by food products and medicament.

- Trade balance registered a surplus of RM9.7bil. Total trade surged by 9.1% YoY to RM130.6bil in September (August: - 0.9% YoY). Also, trade balance registered a surplus of RM9.7bil (vs. RM10.2bil in August). On a YTD basis, net trades had advanced by 3.9% YoY to RM63.9bil. That was despite the contractions in both exports and imports of -0.2% and -0.7%, respectively.

- Higher trade activities with Trans Pacific Partnership Agreement (TPPA). Based on a study by WTO, tariff liberalisation of TPPA could potentially lead to higher trade activities for Malaysia. TPPA augurs well for exports growth on the back of a competitive advantage for its major export products. Nonetheless, imports could grow at a stronger pace compared to the expansion in exports. Import duties for almost 85% of products imported from member countries will be eliminated.

- Healthy trade balance remains supportive of growth in 3Q15. For 3Q15, exports expanded by 5.5%, imports grew by 2.9% and trade balance had registered a healthier surplus of RM22.2bil. These compare to exports /imports /trade balance of -3.7% /-5.2% /RM20.4bil. Key economic activities continued to register expansion despite the slowdown in the household segment. Loans growth remained strong, which suggests expansion in the domestic economy.

Source: AmeSecurities Research - 9 Nov 2015