● Exports surprisingly rebounded in June (2.3% YoY; consensus: -12.3%; May: -29.5%) to a four-month high, beating market expectation

- MoM: rebounded sharply (15.1%; May: -14.0%) to USD12.0b, registering an 11-month high.

● Improved external demand condition led by the non-oil & gas products and higher demand by top trading partners

- Non-oil & gas (3.6%; May: -27.7%): rebounded to a 4-month high, attributable to a sharp rebound in exports of agriculture (35.6%; May: -25.6%). This was further supported by a smaller decline in manufacturing (-2.1%; May: -25.8%) and mining (- 18.9%; May: -38.1%). By destination, shipment to the top trading partner rebounded sharply led by China (34.3%; May: -2.2%) and the US (27.2%; May: -33.2%).

- Oil & gas (-18.5%; May: -50.7%): fell for the eleventh straight month due to a decline in O&G mining exports (-23.0%; May: - 56.7%) and O&G manufacturing based products (-2.1%; May: 30.5%).

● Imports fellbylessthan thepreviousmonth, beating market expectation (-6.4%; consensus:-18.7%; May:-42.2%) as asharp decline in oil & gas (-60.5%; May: -69.9%) was partly mitigated by a rebound in non-oil and gas (3.1%; May: -37.4%)

- By major segments, the decline was attributable to a drop in import of raw material (-13.3%; May: -43.1%) but partially softened by a sharp rebound in consumer goods (37.1%; May: -39.8%) and capital goods (2.6%; May: -40.0%).

- MoM: rebounded (27.6%; May: -32.7%) to USD10.8b on low base effect and the impact of partial reopening of the economy.

● Trade balance stayedin asurplusbut narrowed toUSD1.3b andslightly higher than market expectation(consensus: USD1.1b; May: USD2.0b). Meanwhile, total trade fell for the fourth month, albeit lesser (-2.0%; May: -35.8%).

● Forecast for 2020 exports to remain at -5.0% to -2.0% (2019: -7.0%)

- Year-to-date, exports fell by 4.9% YoY (Jan-May: -6.1%) within house forecast and would gradually improve slightly in the following months on the expectation of easing lockdown and growth recovery among the trading partner.

- While June’s data showed some encouraging signs, the downside risks remain on fears of surging COVID-19 cases as well as the escalating US-China trade and geopolitical tension

Source: Kenanga Research - 16 Jul 2020