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Conservative View on Outlook of Major Economies, Panel Demand Impacted
Published Jun.08 2015, 06:00PM (GMT+8)

Based on WitsView’s latest data, MCI climbed 79.4 points from 5379.9 points to 5459.3 points from May 7th to June 5th. Although the previous FOMC’s meeting minutes gave indicators the interest hike is not in mid-2015, and FOMC members continued to show disagreement in the meeting, the Fed chairwoman still offers hints to the future interest rate increase. The policy meeting in June will show if the highly anticipated interest hike in September will be realized. Meanwhile, the U.S. ISM published some positive news as the manufacturing PMI in May rebounded from the two-year low to 52.8, suggesting the manufacturing was expanding in Q2 after the struggling in Q1. The European economy is having slow progress, with the UK’s referendum on the exit from Euro zone and Greece seeing no signs to solve the debt issue. Greece has to pay 1.6 billion euro of liability to IMF in June on top of the payment of 200 and 750 million euro in May which was already made. As the economic imbalances in member states in the euro zone drag down the growth, the ECB president reiterates that there is no reduction in the QE measure.

The economic growth in China is slower than expected, and in addition to PBOC’s three interest cuts in six month, the Chinese version of “Operation Twist”, pledge supplementary landing (PSL), is announced, which offers the lending backed by collateral to specific banks in order to inject capital to the financial system to revive economy. The economic figures are not optimistic neither, and HSBC’s China manufacturing PMI was 49.2 for May, below the benchmark 50. The services PMI came to 53.5, but the impact from the weakening manufacturing is deeper than that from services to a developing nation like China. In H2’May, Japanese Cabinet’s data indicates the annual GDP growth of 2.4%, which has been expanding for two straight quarters. It undoubtedly is positive for Abe’s government and Bank of Japan. The central bank later decides to keep the scale of debt purchase program, indicating the confidence in the mild economic recovery. However, the core CPI for April was only 0.3%, showing zero growth with the consumption tax increase being deducted. Bank of Japan’s easing policies seems to be only little help to support the inflation in the long term.     

 
Overall, as the four major economies have conservative economic performance and unclear outlook, the panel demand stays weak. With the constant currency depreciation in Europe and emerging markets and low domestic demand in China, the sales of LCD TV, IT products, as well as mobile devices smart phones and tablets is impacted. WitsView holds a more conservative view on the shipment than earlier this year. In view of the demand side, despite of the launches of new models, as well as differentiated and high added value products, brands revise down the BP in response to the declining demand to avoid oversupply. However, the revision cannot compensate the demand drop, and panel prices decline accordingly. The FTA between China and Korean has been signed recently, bringing limited impacts to the panel industry in the short term but causing more uncertainties in the long term. 
 
 

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