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Market Trend

Global Economic Outlook Has Been Pessimistic, and 2016's LCD Industry Will Be Full of Challenges
Published Jan.13 2016, 11:37AM (GMT+8)

According to WitsView's latest statistics, Market Confidence Index (MCI) in 2015 had fluctuated in 1H15, and in 2H15 MCI was affected by slowing global economy, worse-than-market-prediction demand. Apparently, there has been lack of market confidence. Continued with the trend of plunge in 2015, MCI plummeted 162.3 points, from 4218.6 points to 4056.3 points during the period from December 14th, 2015 to January 12th, 2016.Because international oil prices have kept on falling, and United States' economic outlook has become better, the capital that is available to people of US has become sufficient. Therefore, it has facilitated the market of consumers. The US' consumption expenditure in November rose 0.3%, and it has maintained the rising trend stably. Personal consumption expenditure has been the Fed's favorite inflation indicator. It was positive and multiple economic indicators all showed growth. These indicators have given a shot in the arm to the Fed's decision whether to raise the interest rate or not. Just like the market's expectation, the Fed decided to raise the interest rate on December 17th.The Fed raised the interest rate step by step. The first stage of raising the interest rate would only increase 0.25%, so that the pace of raising interests would not be too fast, and the Fed could avoid pushing up the US dollars' exchange rates. Moreover, when the inflation rate was still 0.5%, which was a still a low point, the Fed decided to raise interest rate. This showed that the US' economic outlook has been optimistic. Otherwise, the Fed would not decide to raise interest rate. This move of raising interest rate has been carefully watched for its impact on the recent global economy and financial markets. OPEC did not lower its daily production upper limit, and the Fed decided to raise interest rate, and the crude oil inventory surprisingly skyrocketed. Therefore, prices of international crude oil have been under the pressure of dropping. The prices of international crude oil might plummet to 30 dollars per barrel this year. Half of Russian government's income has depended on oil and natural gas sales. However, because the prices of international crude oil have plunged, Russia's economy tumbled into deep recession, and its GDP in November shrunk 4%. There has been no signs of crude oil price stopping falling. WitsView predicts that this year Russia's GDP will continue to shrink, and the pace of its economic recovery will be quite slow.

There has been no dispute that China's economy has slowed down. Recently, Markit and China's Caixin Media jointly announced that China's December manufacturing PMI dipped from 48.6 points to 48.2 points, down 0.4 point. On a whole, throughout the entire year of 2015, only the February index reached the benchmark 50. This showed that China's manufacturing industry growth rate has been continuously slowing down. Because there has been no light at the end of the tunnel, the risk of economic downtrend has still existed. In Bank of Japan (BoJ)'s monetary policy meeting on December 18th, BoJ decided to implement a larger scale of quantitative easing policy, and BoJ will increasingly pour money into the market, in order to defeat the deflation. Japan's CPI index was 103.5 in November. The core CPI (defined as all items less fresh food) increased for the first time after three consecutive months of decline year-on-year. This month it rose 0.1% year-on-year, and reached 103.4 points. The core CPI excluding fresh food and energy also grew 0.9% year-on-year. These phenomenons above showed that BoJ's QE policy has gradually done its work. WitsView hopes that Japan will get out of the slump of deflation as soon as possible
In 2016, if each panel maker does not cut production in a larger scale, 2016's large size panel market's glut issue will not be solved. Other than that, mid-and-small-size panel market's competition has become more and more severe. Ever since 2013, LTPS panels' penetration rate in the smartphone market has increased year-by-year. In order to respond to the demand of China's mid-and-high-end smartphone market, the major panel makers all have kept on investing in their LTPS fabs. Currently, LTPS panel price has fallen. This will assist the penetration rate of LTPS panels to rise.Panel makers, such as the Japanese JDI, Taiwanese AUO, Chinese Tianma and CSOT, will have new LTPS capacities this year one by one. These capacities will be mostly used on manufacturing smartphones. WitsView predicts that in 2016 global smartphone panel shipment might reach 1.95 billion units. Amid them, LTPS/Oxide TFT smartphone panel shipment's production proportion will rise from 29.8% in 2015 to 34.6% in 2016. WitsView projects that smartphone panel shipment that has centered on LTPS technology will continue to increase in 2016.  Panel makers' profit will be squeezed further for the following reasons: LTPS capacities will keep on expanding, glut issue has not seen any hope, and in 2017, major panel makers, such as Taiwanese Innolux and Chinese BOE will join the battlefield of LTPS panels.

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