Market Trend

In terms of the global economic environment, it was further battered by rising inflation pressures and record high oil prices during the past two weeks. Between June 16, 2008 to June 27, 2008, the Dow Jones Industrial average declined from 12,269.08 to 11,346.51, down by a whooping 7.5%. Meanwhile, oil prices briefly reached a new high at $142 per barrel last Friday (June 27, 2008).

This evidently took a toll on WitsView’s MCI index as well, where it plunged by 508.8 points, dropping from 7834.3 (June 16, 2008) to 7325.5 (June 27, 2008). Aside from the external negative factors, the sharp drop reflected the rising concerns on the LCD sector’s inherent market fundamentals. Despite the market soon entering the traditionally strong third quarter, its robustness is being questioned. Due to the many unstable market factors, it is hard to exactly access how robust 3Q08 will be at the moment.

Index-wise, as the MCI index is currently roughly 300 points above the 7000 level, based on WitsView’s historical MCI data, it is still points to a relatively strong market confidence level. When panel prices began to increase back in Apr07, it wasn’t until Jun07 (June 5, 2008 to be exact) did the MCI index stay firmly above the 7000 mark. This was largely attributed to the panel inventory finally returning to a more balanced state in Jun07 (based on WitsView’s TFT LCD market supply and demand sufficiency). It can thus be seen that 7000 marks a key benchmark. If in the next two months, the index falls to 7000 or below, it will be an important signal of a likely weakening LCD market.