• Exports remained on a roll though capped by base effect disadvantage

• Imports momentum decelerating slightly

• Trade surplus hurt by unfavourable base effect

• Exports to remain steady though a possible slowdown in 4Q

Summary

Exports remained steady in October, powered by two key products, manufacturing and mining. This could have been much higher however if not for the pullback in agriculture which was hampered by contractions in palm oil and palm-based and natural rubber exports. Exports that expanded by +15.0% YoY in October was a marked slowdown against September however, pushing YTD growth to 28.6%, broadly in line with our projection, one of our best forms in many years nonetheless. Exports growth could have been much higher if not for the rise in exports last year (October 2021: +25.5% YoY) which benefitted from gradual economic re-openings in the region and around the world. As mentioned, the month’s exports were lifted by key products especially mining which produced another solid double-digit growth (October: +85.9%) followed by manufacturing (October: +12.6%) though trampled by agriculture (October: - 7.0%), snapping nineteen straight months of broad growth. Imports value improved (October imports: +29.2%), driven especially by capital goods. A lessthan-favourable trade condition dampened trade surplus which slipped by 32.0% to RM18.0bn.

October exports. Exports expanded further in October driven by encouraging rise across key products especially manufacturing and mining which clocked-in solid increases of RM12.4bn (September: +RM27.2bn) and RM5.1bn (September: RM5.2bn) in trade value vis-à-vis last year. Agriculture was a disappointment following a pullback in exports volume (October: -7.0%), especially palm oil and palm-based products (October: -10.4%) consistent with the weakness by key indicator (MPOB October CPO: RM3,309 per tonne; -29.0% YoY). This was added by a sustained decline in natural rubber (October: -34.1%) in line with sluggish form showed by high frequency indicator (SMR20: RM5.52; -25.3% YoY). Exports slipped on a MoM basis however, reflected by a 14.3% drop.

Source: BIMB Securities Research - 17 Nov 2022