Trade in February 2011

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Wednesday April 6, 2011
Exports up in February on E&E, commodities
Growth at 10.7% to RM51.85bil beats economists’ forecast of 5%
PETALING JAYA: The country's exports grew 10.7% to RM51.85bil in February compared with a year ago largely due to higher exports of electrical and electronic (E&E) products and commodities.
Exports growth was revised to 4.6% in January.
The growth in February beat a 5% median estimate in a Bloomberg economists' forecast.
Imports expanded by 11.5% to RM39.21bil, resulting in a total trade of RM91.06bil, an increase of 11% from the corresponding month in 2010.
However, on a month-on-month basis, exports decreased by 5.5% while imports contracted by 12.6% and total trade declined by 8.7%.
Kenanga Investment Bank Bhd economist Wan Suhaimie Saidi told StarBiz that the pace of growth in exports would not sustain due to external headwinds.
“We're not out of the woods yet, the exports-driven economy is still susceptible to a slowdown due to a protracted increase in crude oil prices and the anticipated temporary drop in demand from Japan due to the earthquake,” he added.
Wan Suhaimie said exports growth would only come in the second-half of the year with an increase in demand from Japan as the government begin reconstruction of devastated parts in north-east Honshu coasts.
ECM Libra Capital Sdn Bhd economist Michelle Chia said in an e-mail reply that the Chinese New Year period had likely put a dent on February exports.
“In isolation, it may seem that exports cratered in February. However, exports typically soften during the Chinese New Year month, which fell earlier this year than in 2010,” she said, adding that this distortion likely pulled exports forward to January.
Chia said one way of bypassing the Chinese New Year distortion was to look at year-to-date year-on-year export growth, which increased 7.5%.
She said the country's export growth had been in a bottoming trend and there were expectations for exports to grow steadily this year.
“Nonetheless, the fallout from Japan Malaysia's third-largest export destination and a stronger ringgit may put pressure on exports, especially manufactured goods,” Chia pointed out.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed said in a Statistics Department preliminary release yesterday that China, Singapore, Japan, the United States and Hong Kong were the top five export destinations, accounting for 49.4% of Malaysia's total exports in February.
He said exports to Asean was valued at RM12.36bil, accounting for 23.8% of the country's total exports in February but declined marginally from a year ago due to lower exports of crude petroleum, E&E products, petroleum products as well as iron and steel products

Business
Malaysia’s February export beats forecast
Apr 05, 2011
KUALA LUMPUR, April 5 — Malaysia’s annual export growth rose 10.7 per cent in February, beating market expectations, although economists said the growth trend may not sustain due to the impact of the Japan earthquake on the global economy.
The headline figure was more than double analysts’ forecast for a five per cent rise in a Reuters poll.
ANALYST COMMENT
ALAN TAN, ECONOMIST, AFFIN INVESTMENT BANK
“The numbers came in way above ours as well as the market expectation, partly due to lower base in the corresponding period of last year. The sharper than expected pickup is due to the turnaround in electrical and electronics (E&E) exports, which have been declining for the past six consecutive months.
“However, we believe that the strength of exports in February will likely slow in the months ahead due to the negative impact from Japan, which has already started to slow down global economic growth as reflected in the monthly PMI (purchasing managers index) number. The global PMI number slowed from 57.4 in February to 55.8 in March.
“We don’t expect the 10 per cent to be sustained in the first half of this year. We expect the central bank to raise the OPR rate in the next monetary policy meeting on May 5 by 25 basis points together with a one per cent increase in the statutory reserve rate due mostly to inflationary pressure.”
JOANNA TAN, ECONOMIST, FORECAST PTE LTD
“The firmer headline for exports was within our expectations as a low base supported. In the coming months, we should see Malaysian exports supported on commodities especially now with the energy shortage and rebuilding efforts in Japan lifting demand for fossil-based fuel.
“No doubt the electronics and electrical goods sector could be hampered by the production disruption in Japan but impact will be modest and short-term.”
GUNDY CAHYADI, ECONOMIST, OCBC BANK
“Two things are likely to have been at work that have lifted this export growth number. Firstly, the low base effects provide some distortionary impact to the number, but the more important reason could have been the fact that Malaysia benefits from higher commodity prices.
“As far as the economy’s growth prospect is concerned, we won’t be too hasty into changing our outlook, given the uncertainties if this strength in February proves to be one-off.”
ALVIN LIEW, ECONOMIST, STANDARD CHARTERED BANK
“The stronger than expected export growth recorded in February is certainly a positive surprise for Malaysia especially given the Chinese New Year holidays falling on the early part of February. Exports to China were one of the main factors underpinning the strength in Feb exports. Excluding Singapore, China became the top export destination for Malaysia since 2010, underlying the importance of China for the Malaysian economy.”
“Going forward, it will be important to watch the exports data in the coming months to see how the impact of the Japan earthquake (on March 11) will import on the Malaysia export sector. Commodities (such as LNG, crude oil and timber) should see higher demand while electronics exports may be negatively affected due to some supply disruptions for Japanese components.”
MARKET REACTION
The main stock index closed down 0.2 per cent for the midday break ahead of the data release. The ringgit was unchanged at 3.0265 per dollar after the data release. — Reuters

Malaysia's Feb exports up 10.7pc

2011/04/05
Malaysia’s exports rose at the fastest pace in seven months in February as manufacturers shipped more electronics as well as oil and gas products to customers in Hong Kong and Japan.

Overseas sales climbed 10.7 per cent to RM51.8 billion (US$17 billion) from a year earlier after gaining a revised 4.6 per cent in January, according to a trade ministry statement in Kuala Lumpur today. That was twice the 5 per cent median estimate in a Bloomberg News survey of 18 economists.

Malaysia, an oil and gas exporter and the world’s second- biggest palm oil producer, may benefit from rising commodity prices even as an easing in the global recovery and Japan’s March 11 earthquake threaten to cool demand for Asian goods.
Singapore’s export growth slowed more than economists predicted in February as electronics shipments fell after the Lunar New Year curbed demand from China for parts.

“Global exports demand does seem to be continuing on an uptrend,” David Cohen, a Singapore-based economist for Action Economics, said in a phone interview after today’s report. Malaysia’s February exports growth “is consistent with data around the region showing a sustained momentum going into 2011.”
Shipments were above forecast as some economists may have miscalculated the negative impact of the Lunar New Year public holiday period, Cohen said.

Exports to Japan surged 28.5 per cent from a year ago as demand rose for liquefied natural gas produced by companies like Petroliam Nasional Bhd. Malaysia’s exports to Hong Kong jumped 30.8 per cent in February from a year earlier on higher electronics demand.
Malaysia’s imports in February rose 11.5 per cent to RM39.21 billion from a year earlier. The trade surplus widened to RM12.64 billion from RM9.99 billion in January. -- Bloomberg