November exports stays robust

• November exports expanded 14.4%, while imports up 15.2%

• E&E products remains the main driver of exports growth

• Maintain 2017 GDP growth at 5.8%

Highlights

In November, Malaysia’s exports growth expanded by 14.4% y-o-y (Oct: +18.9%). Meanwhile, imports were up 15.2% y-o-y (Oct: +20.9%). Consequently, trade surplus narrowed to RM9.9bn (Oct: RM10.4bn).

During the month, exports saw a broad-based growth in three major segments: E&E (+21.0%), refined petroleum products (+0.9%) and LNG (+10.9%).

Meanwhile, imports was supported by growth in intermediate goods (+13.8%), consumption goods (+6.6%), and capital goods (+12.2%) during the month.

YTD-Nov17, exports and imports growth expanded 20.4% and 21.2% respectively.

Our comments

In November, exports growth almost matched Bloomberg’s consensus estimate of 14.5%.

On a seasonally adjusted m-o-m basis, exports maintained a positive growth for the second consecutive month at 2.8% (Oct: +4.9%).

Exports registered a record high of RM83.5bn in value since Mar17 and maintained a double-digit pace for the fifth straight month. Exports demand from key trading partners were led by Singapore (+16.7%), US (+13.4%), Japan (+7.8%) and China (+3.4%),.

Meanwhile, the E&E segment remained the driver of exports growth at 38.0% share of total exports.

In the agricultural sector, natural rubber (0.4% of total exports) contracted by 3.3% due to a decrease in value despite a rise in volume. Thus, Malaysia, Thailand, and Indonesia have pledged on 22 Dec 2017 to halt 350,000 metric tons of exports until 31 March 2018 in an attempt to boost prices.

December’s Nikkei manufacturing PMI dropped to 49.9 after registering a 47-month high of 52.1 in November as new orders dipped and output growth slowed. Besides, the strengthening ringgit (Nov17 avg: RM4.18 vs Dec17 avg: 4.08) could also hurt export competitiveness of local manufactured goods.

In tandem with global macro conditions, Malaysia’s exports demand is also likely to normalise in 2018 after registering a strong rebound last year due to tapering of low base effect.

We reiterate our GDP forecast of 5.8% in 2017 and 5.4% in 2018.

Source: Alliance Research - 5 Jan 2018