News

• Gross export growth accelerated by +17.9% yoy (Dec: +4.7% yoy), higher than consensus estimate of 13.0% yoy. Imports also grew higher at +11.6% yoy (Dec: +7.9% yoy).

• The larger rise in monthly exports led to a higher trade surplus of RM9.7bn (Dec: RM7.3bn).

• Exports to most major countries improved in January. By destination, export growth rebounded in the US (+8.7% yoy; Dec: -3.1% yoy), while export growth to the EU quickened (+13.9% yoy; Dec: +12.0% yoy), as well as to China (+17.9% yoy; Dec: +12.8% yoy). However, exports to Japan decelerated to +3.3% yoy (Dec: +7.1% yoy).

Comments

• The faster growth in exports emanated from a broad-based acceleration across commodity and manufacturing sectors partly boosted by seasonal factors.

• Exports of commodity-related products grew at a faster pace of +6.2% yoy (Dec: +3.5% yoy) due to faster growth in export volume for most commodity products amid moderation in prices. LNG exports quickened (+14.0% yoy; Dec: +8.4% yoy) due to acceleration in volume +10.2% yoy; Dec: +4.4% yoy) while price remained steady at +3.4% yoy (Dec: +3.8% yoy). Palm oil exports rebounded by +9.3% yoy (Dec: -8.6% yoy) as volume accelerated strongly by +34.9% yoy (Dec: +6.1% yoy) while export prices continued to decline (-18.1% yoy; Dec: -6.1% yoy). However, crude petroleum was almost flat (+0.1% yoy; Dec: +8.8% yoy) as export volume declined (-11.5% yoy; Dec: +56.9% yoy) but was offset by increase in export price growth (+13.1% yoy; Dec: +16.9% yoy).

• Manufactured export growth accelerated sharply to +22.0% yoy (Dec: +5.6% yoy). Similarly, E&E products also rose sharply to +27.1% yoy (Dec: 6.3% yoy). Chemical products grew at a faster pace (+23.4% yoy; Dec: +6.8% yoy), similar to machinery exports as well (+11.5% yoy; Dec: +4.8% yoy). Optical exports also grew strongly +23.4% yoy (Dec: +6.8% yoy).

• Imports were mainly supported by consumption imports and other imports. Consumption imports rebounded by +9.9% yoy (Dec: -3.4% yoy) due to processed food and beverages while other imports which consist mostly for the purpose of re-exports accelerated sharply (+67.6% yoy; Dec: +19.7% yoy). Capital imports growth declined by -3.1% yoy (Dec: +35.9% yoy) due to lower imports of industrial transport equipment particularly ships, boats and floating structures. Intermediate imports decreased by -1.7% yoy (Dec: -0.8% yoy), following lower imports of electrical and machinery parts.

• The strong export reading in January reflects ongoing global growth, have also been further reinforced by the timing difference of Chinese Lunar New Year holiday (2017: January CNY; 2018: February CNY). Overall in 2018, we still expect Malaysia’s economy to moderate as the base effect wanes off but remain strong at +5.3% yoy (2017: +5.9% yoy).

Source: Hong Leong Investment Bank Research - 6 Mar 2018