Singapore exports down 15.9%YoY in May

By product, electronics was again, far and away the worst performer, falling 31.4%YoY in May. This reinforces a point we have made repeatedly, but which is worth repeating. The trade war is damaging Asia, but it is the global technology slump (of which China's technology war with the US is only a recent part) which is doing the most damage to exports in the region.

Put another way, even on the very unlikely assumption of an all-encompassing trade agreement at the G20 with President's Xi and Trump, and the immediate removal of tariffs, electronics exports are going to continue to be weak.

Without the outsize 28.5%YoY rise in pharmaceuticals, which was worth a swing of about $US1.32bn and stopped the total NODX figure from coming in at -23.5%, which it would have done on a flat pharmaceuticals outcome.

Fortunately, pharmaceuticals do throw out occasional spikes like this, as it tends to be a batch process, and so it is only when the pills come spitting ff the conveyor belt that they tend to be recorded for the purposes of production and subsequently exports. But big spikes tend to be followed either by steadier figures the next month, or declines, so unless one of the other components decides it is time to make a reappearance, then we may expect a resumption of softness next month, offset only by the fact that the June 2018 NODX total was only that hot at only $14.936bn, so the year on year decline should moderate to only a -10 to -012% YoY decline.

The Trade war thesis is also not backed up by the country destination of NODX. Yes, Exports to China are down 23.3%, but they are down 31.2% to Japan. Exports to the US are actually up, though only just, at 0.2%YoY. but exports to the EU are down 10%YoY.

Added to soft domestic activity (retail sales, production), today's data add further credibility to arguments for the MAS to move to a more expansionary policy stance at their October meeting. Given the scale of recent bad news, it is not inconceivable that this is more than just a scaling back of the NEER appreciation path, and may for a time set a flat trajectory for the SGD, though our base case remains the former. .