Malaysia’s export growth eased in March, but exports continued to exceed imports. The trade surplus rose to a one-year high of MYR24.6bn in March, from MYR16.7bn in February.
In 1Q26, the trade surplus totalled MYR63.2bn, compared with MYR48.6bn in 4Q25. This was the largest quarterly surplus since 1Q23.
The stronger trade balance is expected to lift the current account surplus to MYR15.0bn in 1Q26, from MYR2.0bn in 4Q25. The 1Q26 current account data will be released on 15 May, alongside the 1Q26 final GDP figure.
Electrical and Electronics shipments and re-exports supported exports, while imports were led by capital goods. Trade prospects were also linked to the ongoing AI upcycle.
Risks included Middle East tensions and the possibility of a prolonged closure of the Strait of Hormuz. Higher input, crude oil, and shipping costs, plus supply chain disruption, could raise the import bill and weigh on exports.
The 2026 export growth forecast was kept at 2.5%, compared with the BNM estimate of +8.6% and 2025 growth of +6.4%.
We see the widening trade surplus as supportive for the Malaysian Ringgit in the short term. However, the cautious outlook on future export growth introduces significant uncertainty for the currency’s direction. This situation might be ideal for options strategies like straddles on the USD/MYR, which profit from large price moves regardless of direction.
The continued strength in Electrical and Electronics shipments, driven by the global AI upcycle, presents a clear opportunity in the technology sector. Looking back at the semiconductor boom we saw in 2025, a similar pattern could emerge. Traders might consider call options on specific E&E stocks, while simultaneously using put options on the broader FBMKLCI index to hedge against the downside risks from geopolitical tensions.
The heavy reliance on the E&E sector, which accounted for over 40% of our total exports last year in 2025, makes it a focal point. Recent data shows the Bursa Malaysia Technology Index has already climbed 8% this year, outpacing the broader market due to AI optimism. However, with Brent crude prices recently surging past USD 90 a barrel on Middle East news, any escalation could quickly erase those gains by increasing operating costs for manufacturers.
The upcoming release of Q1 GDP and current account data on May 15th is a key event to watch. We anticipate a rise in implied volatility for options expiring around that date as the market positions itself. A current account surplus coming in significantly different from the expected MYR 15.0 billion could trigger sharp movements in both the currency and equity markets.
