Exports growth accelerated to +32.4% YoY in Nov (Oct: +25.5% YoY), surpassing the consensus estimate of +30.0% YoY. Growth was mostly contributed by E&E, petroleum and palm oil products. Imports growth also strengthened (+38.0% YoY; Oct: +27.9% YoY) on higher capital, intermediate and consumption imports. Consequently, the trade surplus narrowed to RM18.9bn (Oct: RM26.3bn).

DATA HIGHLIGHTS

Exports growth accelerated to +32.4% YoY in Nov (Oct: +25.5% YoY), surpassing the consensus estimate of +30.0% YoY. Imports also accelerated to +38.0% YoY (Oct: +27.9% YoY). On a monthly basis, exports shrank (-1.9%; Oct: +3.2%) while imports grew (+5.9%; Oct: +4.0%). Consequently, the trade surplus narrowed to RM18.9bn (Oct: RM26.3bn).

Exports to most major markets grew at a stronger pace, including ASEAN (+39.4% YoY; Oct: +19.4% YoY), US (+33.5% YoY; Oct: +12.4% YoY) and EU (+30.9% YoY; Oct: +16.7% YoY), mainly owing to higher exports of E&E and petroleum products. Meanwhile, exports moderated to Japan (+27.3% YoY; Oct: +29.3% YoY) and China (+20.5% YoY; Oct: +24.8% YoY).

Commodity-related and manufactured exports trended higher during the month. Commodity-related exports grew +52.2% YoY (Oct: +43.6% YoY), contributing +10.6ppt to growth (Oct: +8.5ppt). Despite softer growth, petroleum products continued to record triple-digit growth (+111.6% YoY; Oct: +126.0% YoY) and contributed the most to growth in this category, followed by palm oil products (+97.4% YoY; Oct: +34.6% YoY) and LNG (+99.5% YoY; Oct: +88.7% YoY). Meanwhile, crude petroleum (-13.4% YoY; Oct: +60.5% YoY) and rubber products (-33.7% YoY; Oct: - 33.4% YoY) posted a decline.

Manufactured exports grew +27.4% YoY (Oct: +21.1% YoY), contributing +21.8ppt to overall growth (Oct: +17.0ppt). This was led by E&E products (+17.4% YoY; Oct: +8.8% YoY), in line with stronger semiconductor billings growth (+50.6% YoY; Oct: +41.4% YoY). Machinery, equipment & parts (+34.3% YoY; Oct: +33.5% YoY) and optical & scientific equipment exports (+16.4% YoY; Oct: +9.7% YoY) also increased. However, chemical products (+45.9% YoY; Oct: +58.9% YoY) and manufacture of metals (+75.9% YoY; Oct: +146.9% YoY) eased.

Imports growth also strengthened (+38.0% YoY; Oct: +27.9% YoY) on the back of higher capital imports (+32.1% YoY; Oct: +15.0% YoY), mainly driven by parts for machinery and mechanical appliances. Intermediate imports (+47.4% YoY; Oct: +34.9% YoY) stemmed mostly from electrical machinery, equipment and parts, while consumption imports (+22.8% YoY; Oct: +10.8% YoY) were mostly driven by processed food and beverages.

HLIB’s VIEW

The outlook for global trade remains clouded by inflationary pressures and Covid-19- related uncertainties, as well as continued stress on global supply chains which may affect production and disrupt international trade flows. On the domestic front, Malaysia continues to gain from higher prices and robust demand for commodities and manufactured products. Nevertheless, due to continued prevalence of Covid-19 and evolving strains, we opine that BNM will be patient in maintaining its supportive monetary policy stance. We maintain our expectation for BNM to increase OPR by 25bps in 4Q 2022.

Source: Hong Leong Investment Bank Research - 29 Dec 2021