Strong Export and Import growth – Malaysian exports in July’17 stood at RM78.6b, registering a huge growth of +30.9% y-o-y (vs June’17: +10%). The result was above our expectation and market consensus. The higher-than-expected results were underpinned by massive growth in Petroleum products, Liquefied natural gas (LNG) products as well as Electrical & Electronic (E&E) products. Besides, higher export to main destinations also lifted exports growth in July’17. Meanwhile imports figure in July’17 showed a buoyant growth of +21.9% y-o-y (vs June’17: +3.7%). The result was also above our house expectation as well as market consensus, aided by strong import of major products. On a monthly basis, both export and import rebounded from by posting growths of +7.6% m-o-m (vs June’17:-8%) and +11.7% m-o-m (vs June’17:- 14.5%). Notably, exports in July’17 posted a stronger year on year growth than imports for a third straight month.

As such, the country's trade surplus in July’17 stood at RM8.1b, expanding year on year while narrowing month on month.

Petroleum lifted exports growth – Petroleum products which constitute 9% of total export posted an enormous growth of +76% y-o-y in July’17 after a negative growth of -9% last month. This was supported by increase in both export volume (+40.0%) and average unit value (+32.4%).

Pleasant export growth to main partners – The performance of exports to main destinations in July’17 maintained its steady growth as below:

• Singapore : (July’17: +RM12.1 billion) vs (June’17: +RM10.7billion)

• China : (July’17: +RM9.4 billion) vs (June’17: +RM9.8billion)

• USA : (July’17: +RM7.3 billion) vs (June’17: +RM7.2 billion)

E&E products maintained its momentum – E&E products which is the main contributor to our export continued to post double-digit growth for seventh consecutive months after recording +23.8% y-o-y in July’17 (vs June’17: +15.1%).

Import growth lifted by Intermediate goods – Total import in July’17 recorded an impressive growth of +21.9% y-o-y (vs June’17: +3.7%), thanks to the strong performance in Intermediate goods. Intermediate goods with 56.5% contribution to total import, surged +24.2% y-o-y, underpinned by increased import of processed industrial supplies, particularly jewelry. Besides that, Consumption goods with total contribution of 8.5% recorded +21.8%, supported by increase in import of processed food and beverages especially meat. Meanwhile, Capital goods, which account for 13% of imports, saw growth declined -16.5%, due to lower imports of ships, boats as well as floating structures.

Expecting soft growths in export and import – We expect export and import to record growths of +26% and +18% respectively in Aug’17 following a boasting performance this month. Besides, we believe our trade performance will continue to expand moderately, supported by strong global demand and greater output to main destinations.

Source: JF Apex Securities Research - 6 Sept 2017