MARKET DATELINE

• PP 7767/09/2010(025354)

16 July 2010
Malaysia

Tracking The World Economy,

The Semiconductor Cycle And
The Malaysian Economy

X Signs Of Slowing Global Economic Growth Are Becoming More Apparent

Chart 1 Chart 2
Global Manufacturing And Services OECD Leading Indicator Points To A Slower
Activities Turning Softer Pace Of Economic Expansion In The Months
Ahead
Index % 12-mth annualised rate of change
PMI 30 Euro
65
Manufacturing China area
25
60
20

➤
➤

15
55
US
➤

10
➤

50

➤
5
45
➤

0
-5
➤
40
-10
35 PMI Total Japan
Services -15 OECD
30 -20
05 06 07 08 09 10 00 01 02 03 04 05 06 07 08 09 10

Chart 3 Chart 4
US: Both Manufacturing And Services US: Factory New Orders Turning Weaker
Activities Trending Down Due To Softer Demand

Index
70 ISM non-manufacturing % yoy
index* 30
65

60 20
➤

55 10
➤

50
0
45
-10
40
ISM manufacturing index*
35
-20

30 -30
05 06 07 08 09 10

* Indices for the Institute for Supply Management (ISM), -40

formerly known as the NAPM 00 01 02 03 04 05 06 07 08 09 10

Peck Boon Soon

Please read important disclosures at the end of this report. (603) 9280 2163
bspeck@rhb.com.my

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available for download from www.rhbinvest.com
Chart 5 Chart 6
US: Weakening Home Sales As Credit US: Retail Sales Have Begun To Ease
Incentive Ended

% yoy
% yoy
50
30 Total retail Non-auto
40 Existing home sales sales
30 sales 20

20

10 10

➤
0
0
-10

➤
-20
-10
-30
➤ ➤
-40 New home
-20
sales
-50 Auto
sales
-60 -30
00 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10

Chart 7 Chart 8
US: Consumer Spending Remains Resilient US: Labour Market Conditions Gradually
Despite Signs Of Easing In The Economy Improving

% annualised (Personal consumption expenditure) (‘000) Unemployment %

600 rate (RHS) 12

5
400
4 10

➤
200
3
8
2 0

➤
1 -200 6

0
-400
-1 4

➤
-600 Employment in temporary
-2
help services (LHS) 2
-3 -800
Non-farm payroll
-4 -1000
(LHS) 0
2005 2006 2007 2008 2009 2010 00 01 02 03 04 05 06 07 08 09 10

Chart 9 Chart 10
US: Rising Risk Of Deflation As Core US: The Fed Will Not Be In A Hurry To
Inflation Rate Is Trending Down Shrink Its Balance Sheet

% yoy Total US$bn (Total Assets Of The Fed)

6 CPI 2,500

4 2,000
➤

1,500
➤

1
1,000
0

-1
Core 500
-2 CPI

-3
0
00 01 02 03 04 05 06 07 08 09 10
07 08 09 10

ECONOMY 2 IN CHARTS

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Chart 11 Chart 12
China: Manufacturing Activities And China: House Prices Began To Ease,
Investment Heading South Exports Holding Up

% yoy % yoy
Index Manufacturing % yoy House price
14 60
65 Fixed PMI 35 (LHS)
investment (LHS) 12 50
(RHS)

➤
60 ➤ 30 10
40

➤
30
8
55
20
25 6
10
50
4

➤
0
20
45
2 Exports
-10
(RHS)
0
15 -20
40
-2 -30

35 10 -4 -40
05 06 07 08 09 10 06 07 08 09 10

Chart 13 Chart 14

Euroland: Services And Manufacturing Euroland: Retail Sales And Exports Off Peak

Activities Turning Softer And Easing

% yoy % yoy
Index
PMI 6 Retail sales 30
65
Services (LHS)

60 4 20
➤

55

➤
2 10

50
0 0
45
➤

-2 -10
40
➤
35 -4 Exports -20
PMI (RHS)
Manufacturing
30 -6 -30
00 01 02 03 04 05 06 07 08 09 10 05 06 07 08 09 10

Chart 15 Chart 16
Japan: Both Exports And Industrial Japan: Slowing Growth In Retail Sales And
Production Turning Softer Exports

% yoy
60 % yoy % yoy
6 Retail sales 60
IPI (LHS)
40
4
40
➤

20 2
20

0
0
0
-2
-20
➤

-20
➤

-4

-40 Exports -40

➤ -6
(RHS)
Exports
-60 -8 -60
05 06 07 08 09 10 05 06 07 08 09 10

ECONOMY 3 IN CHARTS
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X Global Semiconductor Sales Normalising

Chart 1 Chart 2
“V” Shape Recovery In Semiconductor Softer Sales In Asia, But US And Euroland
Sales Normalising Holding Up
US$bn % chg % yoy
(Worldwide Semiconductor Sales)
30 80 100
US$bn (LHS) Asia-Pacific
80
25 yoy (RHS) 60
Japan
60

➤
40 US
20 40
20 20

➤
15
0

➤
0

10 -20 `

➤
-20
-40
5
-40
-60
Euroland
0 -60 -80
00 01 02 03 04 05 06 07 08 09 10 00 01 02 03 04 05 06 07 08 09 10

Chart 3
Chart 4
Rising Bookings And
Declining US Market Share For
Shipments, While Book-to-bill Ratio
Semicon Sales Bottoming-out
On Recovery Path
Ratio (Equipment Sector) US$bn (Semiconductor Sales)
% of total sales
Asia-
3.5 3.0
50
Pacific
3.0
Shipments 45 US
(RHS) 2.5
40

➤
2.5 35
2.0
➤

30
➤

2.0
25
1.5

1.5 20
15
➤

1.0
1.0 10
➤

0.5
5
0.5
Bookings Book-to-bill 0
(RHS) (LHS) 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10*
0.0 0.0
01 02 03 04 05 06 07 08 09 10 * refers to (Jan-May) 2010

Chart 5 Chart 6
US: Inventory For Computers And Electronic US: New Orders For Computers And
Products Inching Up Gradually Electronic Products Turning Softer

US$bn Days % yoy

Days New orders Inventory
70 65 (RHS) days
Inventory 60 30
(LHS) Inventory (LHS)
65 60
days 20
(RHS) 50
➤
➤

60 55
10
40
55 50
0
➤

➤
50 45 30
-10
45 40 20
-20
40 35
10
-30
35 30
Apr

Apr

Apr

Apr

Apr

Apr

Apr

Apr

Apr

Apr

Apr

Apr

Apr

Apr
Oct

Oct

Oct

Oct

Oct

Oct

Oct

Oct

Oct

Oct

Oct

Oct

Oct
97 Jan

98 Jan

99 Jan

00 Jan

01 Jan

02 Jan

03 Jan

04 Jan

05 Jan

06 Jan

07 Jan

08 Jan

09 Jan

10 Jan
Jul

Jul

Jul

Jul

Jul

Jul

Jul

Jul

Jul

Jul

Jul

Jul

Jul

0 -40
00 01 02 03 04 05 06 07 08 09 10

ECONOMY 4 IN CHARTS

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X Malaysia : Real GDP Growth To Soften In 2H2010

Chart 2
Chart 1
Both Industrial Production And Exports
Leading Index Points To A Slowdown In
Off Peak And Will Likely Soften
Economic Growth Going Forward

20 15 % yoy
OECD leading 50
index Total

% 12-mth annual rate of change

% 6-mth annual rate of change

(RHS) 10 40 exports
15
30 ➤
5
➤
10 20

0 10

➤
5 0
-5 -10
➤

0 -20
-10
Manufacturing
Malaysian leading -30
production
index (LHS)
-5 -15 -40
00 01 02 03 04 05 06 07 08 09 10 99 00 01 02 03 04 05 06 07 08 09 10

Chart 3 Chart 4
Exports To China Exports To US And Euroland Slowing Down,
And Asia-Pacific Ex-Japan Turning But Mitigated By Rising Exports To Japan
Weaker
% yoy
80 Japan
% yoy
160
China 60 EU
140

➤
120
➤
40 ➤
100

80 20
60
0
40

20
-20
➤

0
➤

-20 -40 US
-40 Asia-Pacific
-60 ex-Japan -60
00 01 02 03 04 05 06 07 08 09 10 00 01 02 03 04 05 06 07 08 09 10

Chart 5 Chart 6
Weaker Exports Of Manufactured Imports Of Intermediate Inputs Off High,
Goods But Commodity Pointing To Slower Increase In
Exports Picking Up Manufacturing Production Ahead
Commodity % yoy
% yoy exports Manufactured
80
60 exports
Intermediate
Exports of non-E&E 50
inputs
60 manufactured goods ➤
40

30
➤

40
➤

20

20 10

0
0
-10
➤

-20 E&E
➤ -20

exports -30
-40 -40

-50
-60
00 01 02 03 04 05 06 07 08 09 10
00 01 02 03 04 05 06 07 08 09 10

ECONOMY 5 IN CHARTS
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Chart 7 Chart 8
Brief Recovery In Private Investment But Manufacturers Beginning To Turn Cautious
Will Likely Weaken Back In Recruiting Workers

% yoy No of workers recruited (Manufacturing Industry)

120 30,000
MIDA investment
100 approvals 20,000

80 10,000

60 0

➤
40 -10,000

20 -20,000

-30,000

➤
0

-20 -40,000

-50,000
-40
Imports of
capital goods -60,000
-60
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10*
-70,000
as at Q1 2010. 2007 2008 2009 2010

Chart 9
Chart 10
Imports Of Consumption Goods Bouncing
Car Sales Turning Softer But Consumer
Back, Consumer Spending Will Likely Be
Credit Holding Up
Resilient
% yoy %yoy
50 60 Consumer
50 credit
40
40
30 30

20 20 ➤
10
10
0
0 -10

➤
-10 -20
-30
-20 Passenger car
-40 sales
-30 -50
01 02 03 04 05 06 07 08 09 10 02 03 04 05 06 07 08 09 10

Chart 11 Chart 12
Commodity Prices Showing Tourist Arrivals Easing
Signs Of Softening

sen/kg (‘000) % yoy

RM/tonne no. of tourist arrivals
2,500 (LHS) 200
4,100 1,150
1,050 %yoy
3,600 (RHS) 150
950 2,000
Rubber
(RHS) ➤
➤

3,100 850 100

750 1,500
2,600
650 50
➤

2,100 1,000
550
0
➤

1,600 450
350 500
Palm oil -50
1,100
(LHS) 250
600 150 0 -100
00 01 02 03 04 05 06 07 08 09 10 00 01 02 03 04 05 06 07 08 09 10

ECONOMY 6 IN CHARTS

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 Chart 13 Chart 14
Government Stimulus Spending Loan Growth Accelerating But NPLs
Trending Down Inching Up

RMbn (Federal Government Expenditure) % yoy % of total loans % yoy

20 200 18 14
3-mth Gross NPLs (LHS)
% yoy %, yoy RMbn
18 6-mth Gross NPLs (LHS)
(RHS) (RHS) (LHS) 16
12
150 Total loan growth (RHS)
16
14
➤

➤
14 10
➤

100 12
12
10 8
10 50
8 6
8 ./
0 6
6
4
4 4
-50
2 2
2
0 -100
0 0
98 99 00 01 02 03 04 05 06 07 08 09 10
03 04 05 06 07 08 09 10

Chart 16
Chart 15
Malaysia Is Likely To Have Done With Its
Headline Inflation Picking Up But Core
Rate Hike For This Year
Infaltion Remains Relatively Stable

% yoy % p.a.
12 3-mth US
8 interbank rate
Total
10 CPI
7
Core
8 CPI
6 3-mth
KLIBOR

➤
6
5
➤

4
➤

4
2
➤

3
0
➤

2
-2

-4 1
OPR
-6 0
05 06 07 08 09 10 00 01 02 03 04 05 06 07 08 09 10

Chart 17 Chart 18
Excess Liquidity Mopped Up By BNM Surplus In Current Account Of The
Remains Substantial Balance Of Payments Improving And
RMbn Remains Sizeable
RM223.7bn
352 (end-Jun) RMbn

302 BNM bills 50 current

account in the
Excess funds mopped up by BNM balance of
40
252 from interbank market payments
Repos (estimate) 30
➤

202
➤

20
152
10

102 0

52 -10

-20
2
97 98 99 00 01 02 03 04 05 06 07 08 09 10
00 01 02 03 04 05 06 07 08 09 10

ECONOMY 7 IN CHARTS
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ECONOMY 8 IN CHARTS

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