● Exports growth rebounded sharply to a nine-month high (9.5%; consensus: 2.7%; Oct: -3.5%) beating market expectation

− MoM: edged up (6.4%; Oct: 2.9%) to USD15.3b, a 25-month high.

● Higher exports growth mainly attributable to a sharp rebound in non-oil & gas based products as a result ofhigher shipment to major trading partners

− Non-O&G (12.4%; Oct: -1.9%): growth rebounded sharply on higher manufacturing (-14.3%; Oct: 3.7%) and agriculture (33.3%; Oct: 24.0%), as well as partially supported by lower growth contraction in mining (-1.9%; Oct: -33.3%) products. By destination, exports of non-O&G to top trading partners charted a positive expansion, led by higher shipment to China (37.3%; Oct: 3.3%) followed by the US (8.6%; Oct: 6.7%) and growth rebound to Japan (6.7%; Oct: -14.4%).

− O&G (-26.3%; Oct: -28.7%): fell for the twenty third straight month due to weak mining (-20.2%; Oct: -27.4%) and a sharp drop in O&G manufacturing-based products (-58.6%; Oct: -33.7%).

● Imports fell for the seventeenth consecutive month(-17.5%; consensus: -24.5%; Sep: -26.9%) mainly due to a steep declinein O&G (-49.2%; Oct: -38.5%) and a smaller drop of non-O&G product (-12.3%; Oct: -25.4%)

− By segment, it was due to a broad-based slowdown led by raw materials (-20.0%; Oct: -27.4%) followed by consumer goods (- 22.0%; Oct: -27.8%) and capital goods (-2.8%; Oct: -24.2%).

− MoM: rebounded sharply (17.4%; Oct: 3.1%) to USD12.7b.

● Trade surplus narrowedslightly to USD2.6b (consensus: USD2.7b; Oct: USD3.6b). Meanwhile, total trade fell for the ninth straight month (-4.6% YoY; Oct: -15.2%) albeit at a slower pace.

● 2020 export forecast retained at -7.0% to -4.0% (2019: -6.8%)

− Year-to-date, exports fell by 4.2%, reflecting the impact of the COVID-19 pandemic on external demand. Nonetheless, we expect growth to remain weak in the near term but would be supported by higher shipment to its top three major trading partners

Source: Kenanga Research - 16 Dec 2020