Electronics cycle shows tentative signs of bottoming – expert 

In September, electronics NODX saw a narrower contraction of 11.6 YoY.

Experts are seeing tentative signs of a bottom in the electronics cycle.

In a report, UOB Senior Economist Alvin Liew pointed out that on a six-month moving average year-on-year basis, “electronics NODX exhibited incrementally narrower contractions from the weakest reading observed in May 2023.”

Liew added that export performance in electronics and/or semiconductor powerhouses like South Korea and Taiwan continued to see improvements in September.

South Korea exports have narrowed to -4.4% YoY in September from -8.3% YoY in August, whilst Taiwan exports recorded the first positive YoY reading since Aug 2022, with September exports expanding +3.4% YoY.

“Recently, Bank of Korea’s Governor Rhee Chang-yong in an interview highlighted that semiconductor prices are hitting the bottom and prices have started to go up, implying a better outlook in the semiconductor space,” Liew added.

Liew, however, underscored that these signs are not conclusive.

“Given the still weak external backdrop on tight financial conditions stemming from an elevated interest rate environment, we take a more cautious approach and would require to see further improvements in the coming electronics manufacturing or NODX prints to conclude that the electronics downcycle has indeed bottomed,” Liew said. 

Beyond electronics, Liew said Singapore’s overall export outlook remains troubled.

RHB Acting Group Chief Economist Barnabas Gan, on the other hand, remains positive about NODX momentum for the last quarter of 2023 to 2024, citing three key economic indicators: key economic indicators across US+ASEAN continued to improve year-to-date; key central banks are approaching, or at, their peak rate objectives, and very early signs of China’s recovery in 4Q23.