● Export growth expanded for the second straight month in March (44.4% YoY; Feb: 34.2%), above market expectations (consensus: 23.8%)

- MoM: expanded sharply (29.4%; Feb: 6.8%) to USD26.5b, a record high in value term amid elevated commodity prices.

● Growth accelerated, supported by elevated commodity prices and higher shipment to China and the US

- Non-O&G (43.8%; Feb: 35.3%): expanded for the second straight month due to a surge in export of mining (404.2%; Feb: 196.0%), followed by manufacturing (240.4%; Feb: 157.5%) and agriculture products (192.3%; Feb: 133.2%). By destination, export of non-O&G to major trading partners broadly expanded led by China (47.1%; Feb: 26.1%) and the US (36.8%; Feb: 28.9%) but partially capped by growth moderation to Japan (33.7%; Feb: 41.9%).

- O&G (54.8%; Feb: 15.6%): rose to a four-month high on higher receipts of manufacturing (186.9%; Feb: 174.0%) and a rebound in mining (26.4%; Feb: -9.9%) products.

● Imports expanded in March (30.9%; Feb: 25.4%), far above market expectations (consensus: 15.7%) due to higher shipment of non-O&G (27.3%; Feb: 14.8%) products

- Broad based expansion led by raw materials (31.5%; Feb: 30.0%), followed by capital goods (30.1%; Feb: 21.0%) and growth rebound in consumer goods (26.0%; Feb: -3.0%).

- MoM: rebounded sharply (32.0%; Feb: -8.6%) to USD22.0b, a record high in value term.

● Trade surplus widened (USD4.5b; Feb: USD3.8b) to a five-month high, beating expectations (consensus: USD2.9b). Meanwhile, total trade expanded (37.9% YoY; Feb: 30.1%) in tandem with the reopening of economic activities.

● Export forecast retained at 7.6% (2021: 41.9%) amid elevated commodity prices

- Exports grew 35.2% in 1Q22 (4Q21: 45.6%) and are expected to continue moderating in the coming months as base effect dissipates as well as taking into account the impact of the COVID-19 and China’s zero-Covid policy on global supply chain and demand. Nonetheless, we believe the downside risk is limited as growth would be supported by higher commodity prices amid heightened geopolitical tension brought by the Russia-Ukraine crisis.

Source: Kenanga Research - 20 Apr 2022