News

• Gross export growth moderated but remained strong at +20.6% yoy in April (Mar: +24.1% yoy), matching median estimate. Import growth also decelerated to +24.7% yoy (Mar: +39.4% yoy).

• The larger deceleration in import growth led to higher trade surplus of RM8.8bn (Mar: +RM5.4bn).

• Exports to all major countries grew by double-digit pace. Faster growth was recorded in China (+50.6% yoy; Mar: +40.3% yoy) and Japan (+44.7% yoy; Mar: +12.0% yoy). This was offset by moderation in export growth to US (+11.0% yoy; Mar: +16.5% yoy), EU (+26.6% yoy; Mar: +28.1% yoy) and ASEAN (+15.0% yoy; Mar: +24.8% yoy).

Comments

• The double-digit growth in exports benefited from the ongoing recovery in commodity prices and strong expansion of manufactured exports partly due to low base effect a year ago.

• Exports of commodity-related products moderated slightly to +26.0% yoy (Mar: +39.2% yoy). Nevertheless, the low base effect in 2016 has still given considerable boost to the overall export figure as prices continued to grow in the double-digit space. Crude petroleum prices grew by +49% yoy (Mar: +62.0% yoy). Similarly, prices of palm oil products also recorded a slower growth of +20.0% yoy (Mar: +35.0% yoy). LNG prices bucked the trend as it recorded faster growth of +43% yoy (Mar: +7.0% yoy) following higher LNG price in April 2017.

• Manufactured export growth remained steady at +19.0% yoy (Mar: +19.9% yoy). This was driven by stable growth in E&E sub-sector which grew by +22.2% yoy (Mar: +21.2% yoy), slower expansion in chemical (+18.0% yoy; Mar: +20.6% yoy) that offset the decline in machinery (-1.2% yoy; Mar: +8.4% yoy). The steady E&E growth was in tandem with global chip sales that advanced by +18.1% yoy (Feb: 16.5% yoy).

• Capital imports growth normalized to +14.8% after recording strong import growth of +84.8% yoy in the previous month due to lumpy items (i.e. floating structures). Intermediate imports moderated slightly to +29.2% yoy (Mar: +35.9% yoy), suggesting slower growth in manufacturing segment ahead. Despite the moderation, the growth was still robust, indicating sustainable near-term performance. Consumption imports slowed to +1.0% yoy (Mar: +14.0% yoy).

• Trade surplus amounted to RM27.6bn in Jan-Apr 2017, lower than RM33.0bn reached in the same period last year. We maintain our 2017 current account (CA) forecast at RM25bn (2016: RM25bn).

• Given the resilient export growth and trade surplus, we maintain our 2017 full-year GDP forecast at 4.9%. We also retain our projection for BNM to leave the OPR unchanged at 3.00% in 2017.

Source: Hong Leong Investment Bank Research - 6 Jun 2017