Exports moderated to +6.6% YoY in Jan (Dec: +10.8% YoY), lower than the +7.1% YoY consensus estimate. Growth was mainly supported by E&E (+13.1% YoY; Dec: +18.1% YoY) and rubber products (+187.4% YoY; Dec: +126.9% YoY). Meanwhile, imports growth eased to +1.3% YoY (Dec: +1.6% YoY) following weaker capital imports. Trade surplus narrowed to RM16.6bn (Dec: RM20.7bn). (Nov: RM17.1bn).

DATA HIGHLIGHTS

Exports recorded its fifth consecutive month of positive growth, albeit at a more moderated pace of +6.6% YoY in Jan (Dec: +10.8% YoY), lower than the consensus estimate of +7.1% YoY. Meanwhile, imports eased to +1.3% YoY (Dec: +1.6% YoY). On a monthly basis, exports and imports decreased by -6.4% (Dec: +13.1%) and - 2.7% (Dec: +11.0%) respectively, resulting in a smaller trade surplus of RM16.6bn (Dec: RM20.7bn).

In terms of major export destinations, exports to China (+26.0% YoY; Dec: +13.5% YoY), and ASEAN (+7.3% YoY; Dec: +5.6% YoY) strengthened on higher exports of E&E products, while exports to US (+18.4% YoY; Dec: +18.2% YoY) were mainly driven by rubber and wood products. Exports to EU moderated (+11.4% YoY; Dec: +14.5% YoY), and declined marginally to Japan (-1.2% YoY; Dec: +13.7% YoY) on account of lower LNG exports.

Commodity-related exports decreased by -3.9% YoY (Dec: +11.0% YoY) following weak exports of LNG (-40.0% YoY; Dec: -23.9% YoY), petroleum products (-32.4% YoY; Dec: -22.0% YoY), crude petroleum (-31.9% YoY; Dec: -42.9% YoY) and palm oil products (-10.9% YoY; Dec: +66.9% YoY). The decline was cushioned by the strong surge in rubber products (+187.4% YoY; Dec: +126.9% YoY), underpinned by resilient demand for rubber gloves. In level terms, rubber products exports was RM6.3bn, 1.75x average recorded in 2020 (RM3.6bn) during the start of the pandemic.

Manufactured exports continued to grow, albeit at a slightly moderate pace (+9.6% YoY; Dec: +10.7% YoY), mainly contributed by E&E products (+13.1% YoY; Dec: +18.1% YoY), chemical products (+10.6% YoY; Dec: +0.9% YoY) and optical & scientific equipment (+9.9% YoY; Dec: +4.6% YoY). Manufactures of metal exports softened (+19.9% YoY; Dec: +34.9% YoY), while machinery, equipment & parts registered a decline (-1.4% YoY; Dec: +2.4% YoY).

Meanwhile, imports eased to +1.3% YoY (Dec: +1.6% YoY) as capital imports continued to decline (-5.4% YoY; Dec: -2.1% YoY) due mainly to reduced imports of electrical machinery, while consumption imports slowed (+1.3% YoY; Dec: +3.3% YoY). This offset the rebound in intermediate imports (+1.4% YoY; Dec: -5.0% YoY) which was driven by higher imports of processed industrial supplies.

HLIB’s VIEW

On the global front, the latest WTO goods trade barometer stands at 103.9, above the baseline value of 100. While this signalled an improvement in merchandise trade, some component indices like export orders and automotive products have turned down, suggesting that upward momentum may moderate in the short-term. This was also seen in global PMI manufacturing data (Jan: 53.5; Dec: 53.8) as growth rates and new orders eased. This could be due to the tighter movement restrictions in some major economies as well supply chain pressures. Meaningful recovery in trade activity will largely depend on effectiveness of vaccination efforts. Maintain 2021 GDP forecast at +5.0%.

Source: Hong Leong Investment Bank Research - 1 Mar 2021