Exports surged by +10.8% YoY in Dec (Nov: +4.6% YoY), exceeding the +3.6% YoY consensus estimate. Growth was lifted by manufactured (+10.7% YoY; Nov: +6.6% YoY) and commodity-related exports (+11.0% YoY; Nov: -2.7% YoY). Meanwhile, imports rebounded by +1.6% YoY (Nov: -9.0% YoY) on account of higher consumption imports. Consequently, trade surplus widened to RM20.7bn (Nov: RM17.1bn). In 4Q20, exports expanded by +5.1% YoY (3Q20: +4.4% YoY), while imports posted a smaller decline (-4.5% YoY; 3Q20: -6.3% YoY). Trade surplus was slightly smaller at RM59.9bn (3Q20: RM60.3bn).

DATA HIGHLIGHTS

Exports surged by +10.8% YoY in Dec (Nov: +4.6% YoY), exceeding the consensus estimate of +3.6% YoY. Meanwhile, imports rebounded by +1.6% YoY (Nov: -9.0% YoY). On a monthly basis, exports and imports rose +13.1% YoY (Nov: -7.0% YoY) and +11.0% YoY (Nov: -1.9% YoY) respectively, resulting in a wider trade surplus of RM20.7bn (Nov: RM17.1bn).

Exports to major markets strengthened, recording double-digit growths to China (+13.5% YoY; Nov: +13.2% YoY), Japan (+13.7% YoY; Nov: +3.5% YoY), EU (+14.5% YoY; Nov: +7.2% YoY) and US (+18.2% YoY; Nov: +24.6% YoY), albeit by a smaller increase. China remained as the main export destination, representing 16.3% of total exports. The expansion was driven by higher exports of E&E and manufactures of metal. Meanwhile, exports to ASEAN rebounded by +5.6% YoY (Nov: -1.6% YoY).

Commodity-related exports posted a turnaround of +11.0% YoY (Nov: -2.7% YoY), led by the acceleration of palm oil products (+66.9% YoY; Nov: +12.1% YoY) and rubber products (+126.9% YoY; Nov: +124.8% YoY), which offset the continued decline in crude petroleum (-42.9% YoY; Nov: -28.7% YoY), LNG (-23.9% YoY; Nov: -43.6% YoY) and petroleum products (-22.0% YoY; Nov: -27.1% YoY).

Manufactured exports increased by +10.7% YoY (Nov: +6.6% YoY) following a rebound in manufactures of metal (+34.9% YoY; Nov: -5.3% YoY), machinery, equipment & parts (+2.4% YoY; Nov: -5.0% YoY) and chemical products (+0.9% YoY; Nov: -6.6% YoY). Optical & scientific equipment exports also picked up (+4.6% YoY; Nov: +0.6% YoY), while E&E exports continued to post double-digit growth (+18.1% YoY; Nov: +23.6% YoY).

Meanwhile, imports picked up by +1.6% YoY (Nov: -9.0% YoY) on account of higher uptake of consumption goods (+3.3% YoY; Nov: -7.2% YoY) due to higher imports of durable goods and food & beverages mainly for household consumption. This offset the decline in intermediate (-5.0% YoY; Nov: -10.6% YoY) and capital goods (-2.0% YoY; Nov: -26.6% YoY).

In 4Q20, exports expanded by +5.1% YoY (3Q20: +4.4% YoY), while imports posted a smaller decline (-4.5% YoY; 3Q20: -6.3% YoY). Trade surplus was slightly smaller at RM59.9bn (3Q20: RM60.3bn).

HLIB’s VIEW

4Q20’s trade surplus of RM59.9bn was larger than recorded in 4Q19 (RM36.8bn), which suggests trade contributed to overall GDP in 4Q20. Nevertheless, the strength of overall trade activity is expected to moderate as global manufacturing new orders (Dec: 54.5; Nov: 55.1) and export orders (51.1; Nov: 51.7) grew at a slower pace in December. Maintain 2020 GDP at -5.5% and 2021 at +5.0%.

Source: Hong Leong Investment Bank Research - 2 Feb 2021