● Exports jumped to 17.6% YoY in February (Jan: 6.6%), its strongest expansion since October 2018 and beating expectations (KIBB: 10.0%; consensus: 8.8%)

- MoM (-2.3%; Jan: -6.4%): growth contraction eased.

● February's exports were bolstered by higher shipment to major trading partners, signalling acontinued global economic recovery driven by vaccine rollout

- China (35.8%; Jan: 26.0%) and EU (15.3%; Jan: 11.4%) accelerated to a five-month high.

- Hong Kong (33.3%; Jan: 8.9%): jumped to a 28-month high.

- US (26.0%; Jan: 18.4%): rose to a seven-month high.

- Singapore (13.3%; Jan: 5.0%): expanded to a two-month high.

● Imports accelerated by 12.7% (Jan: 1.3%), a 32-month highandbeating expectations (KIBB:5.9%; consensus:4.0%)driven by higher re-exports (65.0%; Jan: 7.5%) and recovery in retained imports (2.9%; Jan: -0.5%)

- Attributable to a rebound in capital goods (39.0%; Jan: -5.4%) which rose to a 10-month high, and expansion in consumption goods (17.6%; Jan: 1.3%). Meanwhile, intermediate goods fell marginally (-0.2%; Jan: 1.4%).

● Trade surplus widen to RM17.9b (Jan: RM16.6b) bigger thanexpected(KIBB: RM16.4b; consensus: RM15.9b), as MoM imports fell sharply (-4.5%) than exports (-2.3%).

● Exports forecast retained (2021F: 6.0%; 2020: -1.4%) on the expectation of continued global economic recovery

- We continue to expect a positive outlook in trade activities in the near term, given the low base effect from last year and the wider rollout of the COVID-19 vaccine globally.

- The export will be likely supported by stronger performance of manufactured goods, especially from the E&E products and rubber gloves, as well as higher commodities prices (palm oil and crude oil).

- Backed by an expected global economic recovery and the impact of various policy measures, we maintain our 2021 GDP growth forecast of 4.5% (2020: -5.6%). Nonetheless, we remain cautious due to the rising third wave of COVID-19 infections in some parts of the world, which may threaten the steady path towards global economic recovery.

Source: Kenanga Research - 30 Mar 2021