Exports surged by +31.0% YoY in Mar (Feb: +17.6% YoY), surpassing the consensus estimate of +22.7% YoY. Growth was mostly driven by robust demand for E&E and rubber products. Imports also continued to rise (+19.2% YoY; Feb: +12.7% YoY) following double-digit growth across capital, intermediate and consumption imports. Trade surplus widened to RM24.2bn (Feb: RM17.9bn).

DATA HIGHLIGHTS

Exports surged by +31.0% YoY in Mar (Feb: +17.6% YoY), surpassing the consensus estimate of +22.7% YoY. Imports also continued to rise by +19.2% YoY (Feb: +12.7% YoY). On a monthly basis, both exports and imports recorded a strong rebound of +19.8% (Feb: -2.3%) and +15.9% (Feb: -4.6%) respectively, resulting in a wider trade surplus of RM24.2bn (Feb: RM17.9bn).

Exports to all major markets registered double-digit growth. Exports to US jumped +67.5% YoY (Feb: +26.0% YoY) following higher shipments of rubber and E&E products, while exports to China rose +46.6% YoY (Feb: +35.8% YoY) on the back of E&E and metal products. Other major markets, namely EU (+45.9% YoY; Feb: +15.3% YoY), ASEAN (+17.4% YoY; Feb: +13.2% YoY) and Japan (+14.4% YoY; Feb: +2.4% YoY) also accelerated.

Commodity-related exports moderated to +12.7% YoY (Feb: +33.7% YoY) as the decline in petroleum products (-38.9% YoY; Feb: +32.1% YoY), crude petroleum (- 27.2% YoY; Feb: -24.3% YoY) and LNG exports (-24.3% YoY; Feb: -17.0% YoY) was partly cushioned by the surge in rubber (+210.6% YoY; Feb: +188.7% YoY) and palm oil products (+54.1% YoY; Feb: +10.7% YoY).

Manufactured exports strengthened further (+36.8% YoY; Feb: +13.2% YoY) owing to robust demand for E&E products (+48.0% YoY; Feb: +25.5% YoY) which contributed +16.1ppt to overall exports growth in Mar. This was followed by manufactures of metal (+88.4% YoY; Feb: +27.0% YoY), chemical products (+32.3% YoY; Feb: +20.3% YoY) as well as rebound in machinery, equipment & parts (+49.7% YoY; Feb: -0.4% YoY) and optical & scientific equipment (+30.8% YoY; Feb: -0.2% YoY).

Meanwhile, imports continued to increase (+19.2% YoY; Feb: +12.7% YoY) following double-digit growth rates across all three categories by end use. Capital imports accelerated sharply (+93.4% YoY; Feb: +38.3% YoY) due to low base effect, while intermediate imports rebounded (+12.4% YoY; Feb: -0.1% YoY) following higher imports of processed industrial supplies, particularly non-monetary gold. Consumption imports (+13.0% YoY; Feb: +17.6% YoY) was mainly supported by higher imports of durables, especially jewellery.

HLIB’s VIEW

The rapid recovery in global trade fuelled by countries coming out of lockdown and pent-up consumer demand has resulted in widespread container shortage issues and spike in freight rates, increasing pressure on global supply chains. A recent IHS Markit survey found that supply delays currently experienced are the most widespread in 20 years. In line with this, the Malaysian National Shippers’ Council expects supernormal freight rates and container shortage to linger for eight more months. The acute shipping delays may have a ripple effect on manufacturing activity, as shortage of intermediate products could force manufacturers to cut production, leaving them unable to cope with the rising demand.

Source: Hong Leong Investment Bank Research - 30 Apr 2021