09/12/2014 (Business Times) - MIDF Investment Research (MIDF Research) says a lower trade surplus recorded by Malaysia in October, due to a stronger-than-expected decline in exports, will put pressure on the ringgit.

It said in a report yesterday that the export decline was mainly led by a huge drop of 19.1 per cent in petroleum and 4.5 per cent in electrical and electronic (E&E) product sales.

October’s manufacturing exports declined by 3.7 per cent year-on-year, dragged down by a further sharp decline in petroleum products of 11.8 per cent year-on-year, marking the third consecutive month of declines mainly due to the sharp pullback in export volume (-13.6 per cent) and unit value (-6.3per cent).

This was followed by exports of E&E products of 4.5 per cent year-on-year (September 2014: up 5.5 per cent year-on-year ).

Exports of agricultural goods decreased by 6.9 per cent year-on-year to RM6 billion due to the decline in crude natural rubber and palm oil exports on the back of lower prices and volumes.

“On a monthly basis, crude petroleum exports declined due to falling oil prices while year-on-year exports of liquefied natural gas (LNG) and crude petroleum were up,” it said.

Exports of mining goods went up by 3.5 per cent year-on-year due to better performance in LNG shipments, up 9.7 per cent year-on-year — the third consecutive month of growth.

Crude petroleum exports rebounded to 2.5 per cent year-on-year due to to higher volumes. Nonetheless, on a month-on-month basis, crude petroleum exports declined by 6.1 per cent on the back of falling oil prices.

“The pick-up in imports for intermediate goods, however, should be viewed positively as it indicates an imminent pick-up in manufacturing production and, in turn, exports.

“However, a continuing decline in capital goods imports signals a tapering off in fixed investments,” added MIDF Research.