● Exports expanded 4.3% YoY in November (Oct: 0.2%), reflecting a low base effect and registering slightly below house estimate (KIBB: 4.6%; consensus: 3.1%)

- MoM (-7.3%; Oct: 2.4%): declined for the first time in three months as demand recovery remained uneven due to the ongoing pandemic.

● Expansion in exports was underpinned by improved growth in shipments to the regional peers, mainly HK and SG

- HK (27.4%; Oct: -15.0%): charted a positive turnaround, following the absence of a high base effect observed in October.

- SG (15.4%; Oct: 1.9%): surged to a nine-month high due to a low base in the preceding year.

● Imports registered the steepest drop in six months (- 9.0% YoY; Oct: -6.0%; KIBB: -4.7%; consensus: -6.2%) attributable to the worsened retained imports performance (-14.7%; Oct: -6.3%)

- The larger fall was observed across segments, led by purchase of intermediate goods (-10.6%; Oct: -6.0%) and followed by capital (-26.5%; Oct: -14.9%) and consumption goods (-7.2%; Oct: 3.1%).

● Trade surplus narrowed to RM16.8b (Oct: RM22.1b), as MoM exports declined (-7.3%; Oct: 2.4%) at a faster pace than imports (-1.9%; Oct: 2.9%).

● 2020 exports contraction would likely be smaller than our initial forecast (-10.0% to -5.0%; YTD: -2.6%; 2019: - 0.8%). In 2021, it is expected to rebound on positive spillovers from the COVID-19 vaccine rollout and recovery in commodity prices

- The ongoing resurgence in global COVID-19 infections and the tightened mobility restrictions are expected to weigh on external demand recovery in the near term, as signalled by the sudden drop in November MoM exports and as evidenced by the fifth consecutive month of a downtrend in Malaysia’s Manufacturing PMI in November (48.4; Oct: 48.5).

- In terms of GDP, we maintain our 4Q20 GDP forecast at -1.7% (3Q20: -2.7%), with the whole year growth expected to settle at -5.1% (2019: 4.3%) before rebounding to 6.1% in 2021.

Source: Kenanga Research - 29 Dec 2020