Stellar trade momentum – Malaysian exports and imports registered strong momentum in the first month of 2018, growing higher at +17.9% y-o-y and +11.6% y-o-y respectively (vs Dec’17: Exports: +4.7%, Imports: +7.9%). Notably, this is the highest export value ever recorded for the month of January, standing robustly at RM82.9b. Results beaten our in-house expectation and market consensus. The results were spurred by E&E products, Chemical products, and Palm oil & Palm oil-based agriculture products for exports while consumption goods for imports. Besides, on m-o-m basis, both exports and imports grew higher to +4.5% m-o-m and +1.5% m-o-m respectively (vs Dec’17: Exports:-5.0%, Imports: -2.0%). As such, the country's trade surplus in Jan’18 stood at RM9.7b, registering the highest yearly growth of +104.9% y-o-y since Aug’17 and widening to +33.9% m-o-m.
E&E products lifted export in Manufacturing sector – Manufacturing goods, which accounted for 82.51% of total exports, expanded strongly by +20.4% y-o-y in Jan’18 (vs Dec’17: +18.9%). The massive growth recorded by manufacturing sector was buoyed by stellar performance in E&E product which expanded at a faster clip of +27.1% y-o-y (vs Dec’17: +6.3%). Besides, strong growth in chemicals products (Jan’18: +23.4), iron and steel products (Jan’18: +60.9), optical & scientific equipment (Jan’18: +18.0%) as well as manufacture of metal equipment (Jan’18: +14.8%) also propelled the manufacturing goods. While for Mining goods, the sector expanded by +8.5% y-o-y to RM7.3b in Jan’18. It was supported by higher export of LNG products with +14.0% y-o-y growth due to higher average unit volume (AUV) and quantity. Meanwhile, exports in Agriculture goods expanded +6.2% y-o-y, supported by higher growth in Palm and palm oil based product which increased +10.1% y-o-y.
Besides that, exports to key countries were also strong in January;
Imports lifted by Consumption goods – Imports in Jan’18 improved to +11.6% y-o-y (vs Dec’17:+7.9%) mainly due to higher growth in consumption goods. Consumption goods with 8.6% contribution to total import grew +9.8% y-o-y (vs Dec’17: -3.4%) following higher imports of processed food and beverages especially in pastry products. However, other import components such as intermediate goods and capital goods posted a negative growth of -1.7% y-o-y (vs Dec’17:-0.8%) and -3.2% y-o-y (Dec’17:+35.9%) respectively. The subdued growth in intermediate goods and capital goods was bogged down by lower imports in parts and accessories of capital goods (mainly electrical, machinery, equipment and parts) as well as lower imports in industrial transport equipment (mainly ships, boats & floating structure)
Envisage softer growth in export and import – We reckon that export and import growths will grow at +9.8% and +9.5% in 2018 amid high base recorded last year. However, we believe overall external trade will maintain its positive momentum, albeit at a slower pace, driven by manufacturing sector which is backed by strong global trade activities and meaningful recovery in commodity prices. However, we do not rule out the possibility of trader war following the imposition of tariffs on the import of steel and aluminium by the US, which could affect the global trade and hence our export performance moving forward.
Source: JF Apex Securities Research - 6 Mar 2018
Created by kltrader | Aug 28, 2023