Market Trend

According to WitsView’s latest data, MCI declined 112 points from 4345.9 points to 4233.9 points during the period from Jan. 2 to Feb. 6. The world’s No.1 economy, the U.S., has Janet Yellen as the first woman to chair the nation’s central bank, and as being dovish on the monetary policy, she will face the challenge to control the timing to withdrawal QE. Meanwhile, IMF projects a 2.8% growth in the U.S. economy for 2014, while the country’s Congressional Budget Office forecasts a 3.1% surge with the financial deficits continuing to trim, and two outlook reports indicate optimism. The final PMI reading in euro zone was 52.9 for January, up from 52.1 in December and coming to the two-and half-year high. However, the January CPI rose only 0.7% annually, which is lower than market’s projection and suggests deflation risk with ECB likely to cut interest rate in the future.

China’s National Bureau of Statistics on Jan. 20 revealed a GDP growth 7.7% for 2013, the lowest for the 14 years. Moreover, the service sector controlled a 46.1% share of the economy, beating that of the manufacturing for the first time and indicating a clear economic structure shift. China’s official PMI for January came to 50.5, compared with HSBC’s Chinese PMI reading 49.6, below benchmark of expansion. The slowing economic growth is certain despite of the Lunar New Year Holiday effects. Abenomics attained the ideal goal in 2013 to boost Japanese economy with CPI remaining steady for ten months and deflation risk improving. The unemployment rate dropped to the six-year low in December, but if the growth momentum remains sustainable in 2014 is still unknown.

As the Lunar New Year holidays end, WitsView projects a 3-4% drop in the holiday sales compared to last year. During the traditional slow season, panel prices drop slightly and slowly. Based on WitsView’s panel price survey, some of large-sized panel prices drop around USD 1-5, and mid-and small-sized panel prices stay flat. Panel makers have published the Q4’13 financial statements, and the panel supply glut was implied in the financial statements as LGD’s Q4 net profits trimmed sharply 70% with EPS declining 56%. Samsung’s panel division had the quarterly operating revenue drop 20% on quarterly basis. Besides, AUO, despite ending two years of losses, saw the Q4 net profit tumbling 57% from Q3 and EPS declining 62.2% QoQ. WitsView indicates that panel makers barely gain profits or suffer from losses as the price-cutting competition dilutes profits even with large-generation fabs yet getting fully operational, and the chances for panel makers to recover profits would be more minuscule as the China-based capacity is ready.