● Exports rebounded slightly in April (1.0% YoY; Apr: -29.4%), beating the consensus forecast (-8.7%)

- MoM: rebounded sharply (12.6%; Apr: -17.6%) to an 11-month high, following a sharp decline in the previous month.

● Export growth was supported by a rebound in non-O&G products and improved demand from major trading partners

- Non-O&G (1.9%; Apr: -30.4%): growth rebounded following the steepest decline recorded in the previous month. This was primarily attributed to a strong rebound in agriculture (32.4%; -26.0%) and manufacturing (10.3%; Apr: - 32.7%) products. However, the momentum was partially weighed by weak mining (-21.0%; Apr: -25.8%) product. Nonetheless, demand was relatively improved across major trading partners, led by Japan (8.3%; Apr: -37.7%) and China (4.0%; Apr: -15.9%).

- O&G (-12.1%; Apr: -12.2%): remained contracted for the third straight month due to weaker shipment of manufacturing (-15.5%; Apr: -17.7%) and mining (-10.5%; Apr: -8.1%) products.

● Imports rebounded sharply (14.4%; Apr: -22.3%), beating consensus (-11.0%) due to higher growth in import of non-O&G (18.9%; Apr: -22.3%)

- By category, it was a broad-based improvement led by higher growth for capital goods (60.3%; Apr: -6.9%), followed by consumer goods (36.5%; Apr: -17.7%) and raw materials (4.4%; Apr: -25.3%)

- MoM: growth surged (38.7%; Apr: -25.5%), the highest since July 2018.

● Trade surplus expanded marginally (USD0.4b; Apr: USD3.9b) below consensus (USD3.0b) as imports outpaced exports on a MoM basis. Similarly, total trade rebounded (7.2% YoY; Apr: -26.4%) to a four-month high.

● 2023 export growth forecast revised to -3.4% (2022: 26.1%) from 2.5% projected earlier

- Year-to-date, exports fell by 6.0% YoY, brought mainly by weak external demand and lower commodity prices amid a global economic slowdown and tighter financial conditions. The poor performance in external trade is also partly due to the waning lower base effect amid ample supply. Nevertheless, we expect external demand to recover towards the end of the year, backed by the prospect of gradual improvement of China's economy.

Source: Kenanga Research - 16 Jun 2023