Exports growth picked up in Aug to +18.4% YoY (Jul: +5.0% YoY), owing to reopening and base effect, beating the consensus estimate of +14.6% YoY. Growth was mostly contributed by petroleum products, E&E and chemical products. Meanwhile, imports moderated to +12.5% YoY (Jul: +23.9% YoY), weighed down by lower consumption imports. Trade surplus widened to RM21.4bn (Jul: RM13.8bn).

DATA HIGHLIGHTS

Exports growth picked up in Aug to +18.4% YoY (Jul: +5.0% YoY) due to base effect, exceeding the consensus estimate of +14.6% YoY. Imports moderated to +12.5% YoY (Jul: +23.9% YoY). On a monthly basis, exports and imports shrank -1.8% (Jul: -7.7%) and -11.2% (Jul: +0.4%) respectively. Consequently, trade surplus widened to RM21.4bn (Jul: RM13.8bn).

Exports growth to Japan (+40.8% YoY; Jul: +11.4% YoY), ASEAN (+25.0% YoY; Jul: +7.9% YoY) and EU (+6.4% YoY; Jul: +2.4% YoY) accelerated following negative growth in the same month of the previous year. Meanwhile, exports to US (+12.1% YoY; Jul: -1.1% YoY) rebounded strongly on E&E and rubber product exports. Exports to China (+5.7% YoY; Jul: -7.6% YoY) were driven by higher exports of LNG and chemical products.

Commodity-related exports expanded at a more moderate pace (+35.7% YoY; Jul: +43.2% YoY), contributing +7.4ppt to growth (Jul: +8.7ppt). Growth was led by petroleum products (+3.2% YoY; Jul: +4.7% YoY), LNG (+110.2% YoY; Jul: +69.9% YoY) and palm oil products (+35.1% YoY; Jul: +41.4% YoY). Rubber exports continued to weaken (+4.0% YoY; Jul: +13.3% YoY) due to high base effect, while crude petroleum declined at a slower pace (-3.9% YoY; Jul: -6.8% YoY).

Manufactured exports turned around in Aug, contributing +11.0ppt to overall growth (Jul: -3.7ppt). In terms of growth, the sector rebounded by +13.8% YoY (Jul: -4.6% YoY). E&E (+6.8% YoY; Jul: -12.1% YoY) and chemical products (+59.1% YoY; Jul: +40.3% YoY) were the main contributors of growth, followed by manufactures of metal (+69.8% YoY; Jul: +19.6% YoY) and machinery, equipment & parts (+27.9% YoY; Jul: -8.8% YoY). E&E exports were attributed to higher shipments of semiconductors, consistent with the robust growth in semiconductor equipment billings (+37.6% YoY; Jul: +49.8% YoY). Meanwhile, optical & scientific equipment registered a steeper drop (-17.7% YoY; Jul: -9.7% YoY).

Imports moderated to +12.5% YoY (Jul: +23.9% YoY) due to the slight dip in consumption imports (-0.6% YoY; Jul: +0.2% YoY) as a result of lower imports of durables, especially parts for machinery and mechanical appliances. Capital (+22.9% YoY; Jul: +25.6% YoY) and intermediate imports (+13.4% YoY; Jul: +42.7% YoY) grew at a modest pace.

HLIB’s VIEW

New export orders PMI for the global manufacturing sector declined to a 7-month low of 51.0 in Aug (Jul: 52.7), albeit still expansionary. The slower growth rate could be exacerbated by continued supply chain disruptions and further increase in average vendor lead times. Going into 4Q21, further moderation in trade may be expected if the aforementioned disruptions are prolonged and demand increasingly shifts towards services, in line with faster vaccination progress and wider economic reopening.

Source: Hong Leong Investment Bank Research - 29 Sept 2021