SINGAPORE (Nikkei Markets) -- Singapore's core exports unexpectedly increased in February following three straight months of on-year declines, but most analysts remain wary about the outlook.
Trade agency Enterprise Singapore said on Monday that non-oil domestic exports rose 4.9% last month from a year ago, helped by a strong rebound in shipments to China and Hong Kong. The gain came as a surprise as the median forecast of economists was for an on-year drop of 3.4%, according to estimates compiled by Reuters.
Compared to a month ago, non-oil domestic exports expanded by 16.0% in February to a seasonally adjusted 15.6 billion Singapore dollars ($11.5 billion), reversing January's on-month decline of 5.7%.
"There is little evidence to suggest that a turnaround in global demand is round the corner at this juncture," said Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp., citing the slowdown in major economies and waning global demand for tech products.
"The U.S.-China trade negotiations also remain unsettled, with the Trump administration continuing to emphasize enforcement and the Trump-Xi summit being postponed to at least April," she added.
U.S. President Donald Trump had planned to hold a summit with Chinese President Xi Jinping sometime in March, but news reports now say the meeting could be pushed back to as late as June due to the many unresolved issues between negotiators from the two countries.
Singapore reports non-oil domestic exports as these provide a better gauge of economic activity. This is because prices of refined oil products tend to be volatile, while total exports include the billions of dollars of goods produced elsewhere that are shipped through the city-state's container ports, the world's second busiest after Shanghai's.
According to Enterprise Singapore, domestic exports of electronics declined by 8.0% in February from a year ago, easing from the 15.9% decrease in the previous month. Shipments of disk media products, personal computers, and diodes and transistors continued to fall sharply, but there was a 7.5% rise in exports of integrated circuits.
Non-electronic shipments grew by 9.4% on-year, reversing January's contraction of 7.9% due to sharply higher overseas sales of non-monetary gold, pharmaceuticals and food preparations.
Among Singapore's major export markets, non-oil domestic exports to China expanded by 34.4% in February from a year ago, reversing the previous month's 25.4% contraction as shipments of non-monetary gold, aromatic chemicals and petrochemicals soared.
Shipments to Hong Kong grew by 41.9% following a 11.7% decline in January, helped by overseas deliveries of non-monetary gold, ICs and jewelry.
Maybank Kim Eng, in a note to clients, said the strong rebound in exports to China and Hong Kong could be part due to trade diversion, noting the top three contributors to the growth in Singapore's non-oil re-exports were China, Hong Kong and the U.S.
"A trade recovery hinges on the U.S. and China reaching a trade deal... We are seeing, however, clear signs of rising foreign direct investments in manufacturing across ASEAN (the Association of Southeast Asian Nations), as companies look to relocate and diversify their production network," Chua Hak Bin and Lee Ju Ye said in their report.
"Singapore may benefit from higher manufacturing capacity and exports in the neighborhood," they added.