Exports surged by +48.2% YoY in Aug (Jul: +38.0% YoY), outperforming consensus estimate of +34.3% YoY. Growth was mostly underpinned by E&E, petroleum, and palm oil products. Imports growth also strengthened (+67.6% YoY; Jul: +41.8% YoY) on the back of higher intermediate and consumption imports, which offset the softer capital imports. The trade surplus widened to RM16.9bn (Jul: RM15.6bn)

DATA HIGHLIGHTS

Exports surged by +48.2% YoY in Aug (Jul: +38.0% YoY), outperforming consensus estimate of +34.3% YoY. Imports also accelerated to +67.6% YoY (Jul: +41.8% YoY). On a monthly basis, both exports and imports posted a rebound. However, the upturn in exports (+5.4%; Jul: -8.2%) outpaced that of imports (+5.0%; Jul: -4.6%), resulting in a wider trade surplus of RM16.9bn (Jul: RM15.6bn).

In terms of major export markets, stronger exports growth was recorded to all major markets across the board; ASEAN (+60.4% YoY; Jul: +54.1% YoY), Japan (+41.5% YoY; Jul: +30.8% YoY), US (+38.2% YoY; Jul: +20.5% YoY), EU (+30.7% YoY; Jul: +21.1% YoY) as well as China (+21.3% YoY; Jul: +9.8% YoY). Growth was mainly driven by strong E&E and petroleum products demand.

Both manufactured exports and commodity-related exports trended higher during the month. Manufactured exports accelerated (+38.8% YoY; Jul: +35.9% YoY) during the month, resulting in a larger contribution of +29.7ppt to overall growth (Jul: +26.1ppt). This was led by higher E&E products (+48.5% YoY; Jul: +35.2% YoY) and optical & scientific equipment (+51.3% YoY; Jul: +36.4% YoY), which offset the moderation in machinery, equipment & parts (+43.6% YoY; Jul: +56.9% YoY) and chemical exports (+15.3% YoY; Jul: +18.9% YoY). Exports of manufacture of metals also slowed (+8.4% YoY; Jul: +35.7% YoY).

Commodity-related exports growth surged to +78.6% YoY (Jul: +43.7% YoY), contributing +18.5ppt (Jul: +11.9ppt) to overall growth. This was mainly driven by a jump in petroleum products exports (+180.3% YoY; Jul: +80.3% YoY). Crude petroleum (+107.6% YoY; Jul: +74.0% YoY) also accelerated, following a rebound in export volume (+17.9% YoY; Jul: -22.7% YoY) and robust average unit value (AUV) (+76.1% YoY; Jul: +79.0% YoY). Similarly, palm oil exports strengthened (+47.9% YoY; Jul: +26.2% YoY) following positive export volume (+27.8% YoY; Jul: -12.9% YoY) and AUV growth (+23.3% YoY; Jul: +45.2% YoY). These offset the moderation in LNG exports (+72.9% YoY; Jul: +82.0% YoY) and continued decline in rubber products exports (-50.2% YoY; Jul: -52.1% YoY), albeit at a slower pace.

Meanwhile, imports growth accelerated (+67.6% YoY; Jul: +41.8% YoY) following higher intermediate (+56.1% YoY; Jul: +32.1% YoY) and consumption imports (+43.1% YoY; Jul: +33.1% YoY), offsetting the softer capital goods imports (+23.7% YoY; Jul: +29.1% YoY). Intermediate imports were mainly supported by fuel & lubricants, while consumption imports were supported by processed food and beverages.

HLIB’s VIEW

Malaysia is expected to maintain its positive trade momentum in upcoming months due to its diversified export structure and strong manufacturing sector. However, risks of a potential global economic slowdown and further tightening of global monetary policies could taper Malaysia’s trade performance moving into the end of the year. We maintain our expectation for BNM to keep OPR unchanged at 2.5% until end-year.

Source: Hong Leong Investment Bank Research - 21 Sept 2022