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Market Trend

Market Demand Weaker Than Expectation While Consuming Panels Is Key in 3Q15
Published Sep.10 2015, 05:50PM (GMT+8)

According to WitsView's latest statistics, Market Confidence Index (MCI) increased 79.9 points, from 4400.5 points to4480.4 points during the period from August 7th to September 9st, 2015. Oil over-extraction caused oversupply, and international oil prices all fell.Energy Information Administration (EIA) announced on August 19th that crude oil inventory increased to 260 million barrels. Oil prices have currently dropped to US$43 per barrel, a new record low in the past six years and a half. They are possible to fall below US$40 in the future.USA's CPI of July rose 0.1%, lower than previously expected 0.2%. USA's annual core inflation rate stayed at 1.8%, flat as expected.Fed's July Minutes of the Federal Open Market Committee showed a majority of respondents viewed there were not sufficient conditions to increase rate but getting close to the target range.Experts in markets had differences of opinion. Some experts thought that Fed will not raise interest rate in September.The others thought the opposite. Whether Fed will choose to raise interest rate or launch QE4 to lower the risk of deflation and ease the tension of financial market is one of the important factors to watch by global market in September.EU's GDP in Q2 grew 0.3% QoQ. After implementing QE polices early this year, Consumer Price Index has increased slightly but has still risked deflation. Eurostat announced EU annual inflation rate in July stayed 0.2%, flat as June's, and matched market's expectation. European Central Bank (ECB) pointed out that EU's recovery has been moderate and gradual. After the third round of bailout for Greece, the resignation of Greek prime minister and re-election of Greek Congress are unknown variables for future EU economy. 

Currently, China's economy has slowed down. To lead China's economy and financial market to revive, People's Bank of China (PBC) restarted the policies of lowering the deposit reserve rates and lowering the interest rate. On September 6th, it lowered financial institutions' Renminbi (RMB) deposit reserve rate by 0.5%.Meanwhile, to enhance financial institutions' ability to support "agriculture, countryside and farmers" and small-and-micro businesses, PBC lowered extra 0.5% of deposit reserve rate for rural financial institutions, such as "rural commercial banks at county level", "rural cooperative banks", "rural credit cooperatives", "village-and-town banks" etc. PBC's move not only shocked the market but also increased the pressure of depreciation of RMB.For Japan, after increasing sales tax in April 2014, it entered economic recession. After Japan's core inflation reached its peak, 1.5% in April 2014, the core inflation has been weak because of oil price drop and soft domestic demand.In Q2, Japan's GDP worsened, down 1.6% YoY and down 0.4% QoQ. This was the largest decline in the past four seasons.The shadow of deflation was looming over Japan in July, and its inflation rate came to 0%, better than -0.2% projection from the market. However, it dropped 0.1% compared with June's inflation rate.Japan's inflation rate has been moving away from its own target, 2% in 2016.

Global economic trends remain unclear. Many worrying factors cause stock markets of principal sectors of the economy to collapse and modify.Hence, consumers' procurement momentum becomes weak.Q4 is a traditional peak season for consumers' electronics. In a crucial economy, stock markets might impact the sales of TVs, tablets, NBs and smartphones and caused inventory consumption to worsen than projection.Recently WitsView also modified downwards the shipments estimate of TV sets in 2015, from 225M units to 220M units.According to WitsView's August panel prices report, recently IT panel quotes continued to fall. For MNT, the largest drop was US$2 for the 23.8" and 27". As for NB, the prices of mainstream size categories of 15.6" and 14" fell US$1~1.2., falling more severely than previous month and proving that IT market did show any bounce back of its demand in a supposedly peak season.For TV panels, in August, the scale of prices drop for the mainstream size categories was larger than previous month's scale. Panel makers struggled to maintain the prices of 32" panels to stay at US$70.In terms of bargaining power of panel prices, weak demand made a buyer's market.

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