Exports growth picked up to +4.3% YoY in Nov (Oct: +0.2% YoY), faring better than the +3.1% YoY consensus estimate. Growth was lifted by manufactured exports (+6.6% YoY; Oct: -0.1% YoY) amid decline in commodity-related exports (-4.1% YoY; Oct: +1.3% YoY). Meanwhile, imports fell further (-9.0% YoY; Oct: -6.0% YoY) as capital, intermediate and consumption imports registered a decline. Trade surplus was smaller at RM16.8bn (Oct: RM22.1bn).

DATA HIGHLIGHTS

Exports grew at a faster pace of +4.3% YoY in Nov (Oct: +0.2% YoY), faring better than the consensus estimate of +3.1% YoY. Meanwhile, imports declined at a steeper pace of -9.0% YoY (Oct: -6.0% YoY). On a monthly basis, both exports and imports decreased, with the decline in exports (-7.3%; Oct: +2.4%) outpacing that of imports (-1.9%; Oct: +2.9%), which led to a smaller trade surplus of RM16.8bn (Oct: RM22.1bn).

In terms of major export markets, exports grew strongly to the US (+24.6% YoY; Oct: +25.6% YoY) and China (+13.2% YoY; Oct: +4.9% YoY), mostly driven by E&E products. Exports to EU also picked up (+7.1% YoY; Oct: +4.7% YoY), contributed by rubber products. Meanwhile, exports to Japan rebounded (+3.5% YoY; Oct: -6.0% YoY) while exports to ASEAN saw a smaller decline (-2.2% YoY; Oct: -3.6% YoY).

Commodity-related exports decreased by -4.1% YoY (Oct: +1.3% YoY), owing to the decline in LNG (-43.6% YoY; Oct: -57.7% YoY), crude petroleum (-36.5% YoY; Oct: - 44.8% YoY), petroleum products (-28.1% YoY; Oct: -25.6% YoY), as well as moderation in palm oil products (+12.1% YoY; Oct: +46.5% YoY) which offset the continued surge in rubber products (+124.8% YoY; Oct: +127.3% YoY). Disruptions to Petronas’ Miri and Cendor crude oil supplies in late Oct may have contributed to the weak crude petroleum exports during the month. By our estimates, these platforms have a combined production capacity of 32,000bpd (4.9% of total crude petroleum production in Malaysia).

Growth of manufactured exports accelerated to +6.6% YoY (Oct: -0.1% YoY), propped up by E&E products (+23.6% YoY; Oct: +3.0% YoY) and marginal rebound in optical & scientific equipment (+0.6% YoY; Oct: -3.0% YoY). This offset the decline in chemical & chemical products (-6.6% YoY; Oct: -16.1% YoY), manufactures of metal (-5.3% YoY; Oct: -10.1% YoY) and machinery, equipment & parts (-5.0% YoY; Oct: +3.2% YoY).

Meanwhile, imports declined at a faster pace (-9.0% YoY; Oct: -6.0% YoY) as all three main categories of imports by end use registered a decline. Capital (-26.5% YoY; Oct: -14.9% YoY) and intermediate imports (-10.6% YoY; Oct: -6.0% YoY) decreased at a faster pace, while consumption imports (-7.2% YoY; Oct: +3.1% YoY) recorded its first decline after five months of expansion.

HLIB’s VIEW

On the global front, the RWI/ISL Container Throughput Index fell slightly to 121.0 in Nov after hitting an all-time high of 122.6 in Oct, pointing to a softening recovery in world trade activity. Nevertheless, the index remained at an elevated level, suggesting that world trade has largely recovered from its slump during the peak of the pandemic in 2Q20. While downside risks continue to cloud the recovery in overall trade activity owing to the resurgence in Covid-19 cases, vaccine rollout in some major economies is anticipated to alleviate some of the risks in 2021. Maintain 2020 GDP at -5.5% and 2021 at +6.0%.

Source: Hong Leong Investment Bank Research - 5 Jan 2021