Malaysian exports fall more than expected in October as crude oil, machinery remain major drags

Exports in Malaysia fell more than what markets had initially anticipated during the month of October, as exports of crude oil and machinery remained the major drags during the period.

Malaysian headline October exports plunged 8.6 percent y/y, against market expectation of a 5.6 percent decline. In addition, imports fell sharply too. Demand for imports slide by 6.6% in the month. Ironically, that lifted overall trade balance for the month to a surplus of MYR 9.76bn, the highest since March this year.

Exports of crude petroleum declined -27.9 percent, LNG by -40.2 percent, machinery/appliances came in at 19.8 percent, while manufactures of metal registered 43.8 percent, remaining the major drags. And key electronics products, which accounts for about 38 percent of total exports are still on a tepid recovery path. Electronics export sales were up by 1.2 percent y/y, from 0.5 percent previously.

In terms of markets, except for export sales to China and Hong Kong, all other key markets such as Singapore, US and Japan reported declines in sales. That said, there is a glimmer of hope with the stronger consumption growth in the US as well as the continued improvement in the PMIs have all key markets. A better US growth outlook could well imply stronger export performance in the coming quarters.

In addition, global oil prices have bottomed and is seen heading up with recent OPEC deal. So, low oil prices will be less of a drag going forward. In short, though external economic conditions remain challenging, the export cycle could have bottomed. Expect a gradual improvement ahead, DBS reported.