Resilient Export and Import growth – Malaysian exports in August’17 stood at RM82.2b, clinching another growth of +21.5% y-o-y (vs July’17: +30.9%). The result is below our expectation but above market consensus. The encouraging result was underpinned by improved performance in main products such as Liquefied natural gas (LNG), Electrical & Electronic (E&E) product as well as Rubber product. Besides, higher export to main destinations such as China, USA and Hong Kong also supported growth in August. Meanwhile import figure in Aug’17 recorded another growth of +22.4% y-o-y (vs July’17: +21.9%). The result is above our house expectation as well as market consensus. The higher than expected import figure was aided by strong performance of major products. On a monthly basis, both export and import posted a respective positive growth of +4.6% m-o-m (vs July’17:+7.6%) and +2.5% mo-m (vs July17: +11.7%).

As such, the country's trade surplus in Aug’17 stood at RM9.9b, expanding +16.1% y-o-y and +22.9% m-o-m.

Export growth buoyed by LNG products – LNG products which constitute 4.8% of total export posted a massive jump of +110.1% y-o-y in Aug’17 (vs July’17:+63.6%), underpinned by both higher Average Unit Value (AUV) and volume.

Export sustained its growth momentum to main partners – The steady growth of exports to its main destinations in Aug’17 was well maintained which are shown below:

• Singapore : (Aug’17: +RM12.1 billion) vs (July’17: +RM12.1 billion)

• China : (Aug’17: +RM11.3 billion) vs (July’17: +RM9.4 billion)

• USA : (Aug’17: +RM7.9 billion) vs (July’17: +RM7.3 billion)

• Japan : (Aug’17: +RM6.2 billion) vs (July’17: +RM6.3 billion)

E&E product still a major export contributor – E&E product which is the main contributor of total export with 37.8% total contribution posted a significant growth of +20.1% in Aug’17, which tumbled from previous month of +28.5% y-o-y. This was the eight straight months where E&E products recorded a double-digit growth. This is in line with Semiconductor Industry Association (SIA) outcome in which global semiconductor sales were +23.9% y-o-y and +4.0% m-o-m higher in Aug’17.

Import of Intermediate goods advanced in all main components – Import in Aug’17 recorded another positive growth of +22.5% y-o-y mainly driven by better performance in its main components. Intermediate goods rose by +25.5% y-o-y following the positive growth in electrical machinery and equipment. Meanwhile, import of consumption goods increased by +17.8% due to higher imports of processed food and beverage mainly for household consumption especially cereal. Besides, capital goods rose +12.7 y-o-y (vs July’17:-16.5%) backed by higher imports in machinery and mechanical appliances. In addition, the resilient performance of import in Aug’17 was due to positive import growth from its main destinations such as Singapore (+RM90.2 billion), China (+RM80.4 billion), USA (+RM58.5 billion), Japan (+RM50.2 billion) and Thailand (+RM33.2 billion).

Expect further growth in export and import – We reckon that export and import will post another strong growth of +23% and +24.5% respectively in Sept’17 following an impressive performance recorded in August as well as resilient growth in E&E product. In addition, our trade performance will continue to be strengthened by strong global demand and meaningful recovery in commodity prices.

Source: JF Apex Securities Research - 9 Oct 2017