Exports rose sharply in April to 14.0% YoY (Mar: 2.2%) backed by stronger growth in electrical and electronics (E&E) and petroleum products. Though our forecast was still above consensus (Bloomberg median estimate: 6.3%), we were still a little too conservative at 10.2%. We might have underestimated the effect of last year’s lower base. On a MoM basis, however, exports fell marginally by 0.3% in April (Mar: +20.1%).
Similarly, while last year’s lower base effect lifted the E&E exports to 21.2% YoY (Mar: 8.7%), it was stagnant on MoM basis. This is in line with our view that the tech-upcycle had reached its peak and it will taper off going forward. According to Semiconductor Industry Association, global semiconductor shipments have slowed for the fourth straight months to 17.2% YoY from 19.0% in March.
Stronger oil price drove crude petroleum exports growth to 22.7% YoY in April (Mar: 18.4%). Brent crude oil prices averaged USD75.2/barrel in April, an increase of 43.8% from USD52.3/barrel a year ago. Meanwhile, exports of petroleum products surged 38.9% YoY (Mar: -8.6%), contributing a higher 2.0 percentage points (ppts) to the month’s overall exports growth (Mar: -0.5 ppts).
By destination, the YoY growth in exports was mainly attributed to expansion in exports to Hong Kong and China which surged to 113.8% and 22.0% respectively (Mar: +62.1% and -4.7%). This is in line with better growth indicators of Hong Kong and its proximity to China’s economy during the month.
Meanwhile, imports rebounded after two months of decline to 9.1% YoY (Mar: -9.6%). The month’s imports came in closer to the house estimate of 8.0% but surpassed Bloomberg’s median estimate of 3.8%. The month’s growth was contributed by imports of capital goods which rebounded to 4.8% YoY (Mar: -30.4 %) following higher imports of transportation equipment. The average value of Malaysian Ringgit to USD appreciated by 0.43% following March’s 0.24% appreciation which possibly drove imports during the month. Meanwhile, imports of intermediate and consumption goods contracted by 11.9% YoY and 1.8% respectively.
Following the month’s rebound in imports, trade surplus narrowed to RM13.1b from March’s RM14.7b. Although total trade rebounded sharply by 11.7% YoY, it grew by a marginal 0.8% MoM (Mar: 17.1%).
Latest manufacturing indicator demonstrated weak domestic and external demand. Malaysia’s IHS Markit PMI has reported further deterioration in May as weak external demand continues to weigh on new orders and output. Looking at the external scene, global manufacturing growth eased in May which could weigh on global trade flows. Additionally, the US-China trade spat raises concerns that potentially could affect prices of commodities, particularly agriculture. Coupled with the expectation of declining oil prices, we expect exports to remain lacklustre in the coming month. Nonetheless, we expect the weaker Ringgit, which fell by 2.0% during the month to bolster exports in May. Based on recent development of external as well as domestic factors, we have revised our GDP growth forecast to 5.1% for 2018 from 5.5% (2017: 5.9%).
Be the first to like this. Showing 0 of 0 comments
Post a Comment
People who like this
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 7303 views | 6 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....