Exports in the month of May grew by 6.7% YoY, having finally
taken a turn for the better
after two consecutive
months of contraction
and beating market expectations
of a 4.5% growth. This is attributed by strong demands of E&E and
commodities from the Singapore, the USA and Japan. Compared to the previous
month, exports expanded by 1.8% and year‐to‐date,
exports pace increased by 3.9% compared to 6.3% in the same period in
2011.
Maintaining a sturdy
pace, imports gained
16.2% YoY, once
again beating market expectations
(of 7.2% in May). On a monthly basis, it gained 7.9% and year‐to‐date, registered
an 8.9% growth.
With stronger imports
growth, trade surplus narrowed to RM4.6b in May and totaled to RM41.9 so
far this year.
There has finally been a rebound in E&E exports
– of 1.1%
YoY increase in May. This
comes from higher
shipments of E&E
manufacturing to the
USA, Thailand and Vietnam. This is especially good news coming from the
USA, a small light in
the midst of
persistent growth inconsistency
coming from across the
Pacific. In comparison to the previous
month, E&E exports grew 4.3%. Exports tallied to RM93.9b in the first 5
months of the year.
The mining and commodity sectors continue to fare decently
well, growth rising by 15.0%
YoY in May.
This is headed
by strong demands
of LNG (+40.6%), refined
petroleum products (+78.1%)
and manufactures of
metal (+10.8%). There was,
however, a significant
depreciation in the
exports of crude oil, which fell
by 22.4%. Palm oil, Malaysia’s 3rd largest export remains on a
contraction, albeit a
slight 0.5% in
May. However, compared
to the previous month,
there was a
25.1%‐jump in exports,
in line with
our expectations of production picking up and will continue to do so
into 3Q12.
Moving on to
individual trade partners,
Singapore is Malaysia’s
top export destination in
May, recording at
RM7.8b (+16.6% YoY).
This is followed closely by
China at RM7.1b
(+1.4% YoY) primarily
due to higher
exports of rubber products.
Japan’s export totaled
to RM6.7b (+12.1%),
once again largely due
to LNG exports.
Even though Japan
has restarted one
nuclear power station starting
the 1 July
2012, strong protest
against using nuclear energy have led to alternative power
supplies being considered and it will be some time yet before any all power
stations are back online. This allows us to look forward to strong demands from
Japan for LNG, at the very least in the coming months. Exports to the USA grew
by 10.2% at RM5.1b on the support of
E&E products. It
is unsurprising to
find exports to
the EU decreasing
by 3.2% to RM5.4b
as the situation
continues to remain
bleak as the
year progresses.
Once again, Malaysia’s domestic economy is proving strong.
All three sectors of imports posted
an expansion. Capital
goods grew by
a whopping 41.9%, signifying strong capital expansion in
line with developments under the ETP. After two months of contractions,
intermediate goods grew by 6.6% ‐ a good sign to
stronger exports up
ahead. Consumption remains
strong as good imported
improved by 14.8%,
despite the ringgit
weakening slightly in the
second half of May.
All in all,
we are glad
that things have
begun to improve
– allowing us
to remain optimistic
for the 2H12.
As hopeful as
we are moving ahead, we are still
very aware of remaining cautious (global PMI is still sitting below the 50 mark
expansion line at 48.9). Even with a
sturdy domestic economy,
the fact is
that developing economies
prospects are still
pretty much depending
on the situation in the West but
we are glad that the trend has begun to turn to the East. For now, we retain
our full‐year
GDP at 5.0%.
Source: Kenanga
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