UPDATE 1-Taiwan June export order growth slows as China cools

* June orders up 22.48 pct (forecast median +21.9 pct)

* Slowest rate of increase since October 2009

* China order growth drops fastest as tightening bites
(Adds comment)

By Jonathan Standing

TAIPEI, July 20 (BestGrowthStock) – Orders for Taiwan’s exports
recorded the slowest pace of year-on-year growth in eight
months in June, as widely expected, adding to growing evidence
of a slowdown in demand as the global economic recovery
sputters.

The data, a bellwether for other Asian exporting economies
such as South Korea and an indicator of global demand, came as
China said its strong growth in exports in the first half would
give way to slow growth in the second, with Europe’s crisis a
cloud over demand [ID:nTOE66J023].

Orders for Taiwan’s exports, almost half of which are
electronics or communications equipment, rose 22.48 percent in
June from a year earlier, the economics ministry said on
Tuesday, just above a median forecast of 21.9 percent in a
Reuters poll but within the poll’s 19.64 percent to 24.8
percent range.

“No doubt the pace for export orders is slowing down with
the U.S. book-to-bill ratio easing recently, so the global tech
sector can see recovery slowing,” said Joanna Tan, economist at
Forecast Ltd in Singapore.

“And with the global recovery showing signs of slowing,
that will probably form the backdrop for export orders in the
coming months.”

The book-to-bill ratio [USSEMI=ECI] for North American
manufacturers of equipment used to make micro chips has been
easing slowly since February and was at 1.12 in May. The ratio
is watched as an indicator of the demand pipeline for the
industry.

The pace of Taiwan’s order growth has fallen steadily since
peaking at 71.8 percent in January.

The June figures showed order growth from China falling to
15.54 percent from 34.34 percent in May, an indication that
tightening policies on the mainland aimed at cooling its robust
growth were having an effect. [ID:nTOE66D06L]

“Taiwan’s export orders have much higher exposure to China
than other Southeast Asian countries,” said Ma Tieying,
economist at DBS in Singapore.

“We expect Taiwan to slow down because of China and the
uncertainties in the European debt crisis.”

Orders from the U.S. slowed to 17.44 percent growth from
May’s 20.32 percent and orders from Europe slowed to 25.69
percent growth from May’s 42.17 percent.

To see the trend of orders data in a graphic, click:

http://graphics.thomsonreuters.com/F/07/TW_EXPORD0710.gif

A full table of the data can be found at:

http://www.moea.gov.tw/

PROFIT PRESSURES?

Analysts expect weaker demand to hit top Asian technology
firms such as South Korea’s Samsung Electronics Co (005930.KS: )
and LG Display (034220.KS: ) and Taiwan’s AU Optronics
(2409.TWO: ), in the second half of the year, in part due to
worries over fallout from Europe’s debt crisis and high
inventories. [ID:nTOE66I032]

Some chip firms are expanding, however, seeing strong
demand ahead from corporate PC users for desktop machines, and
other analysts noted that export orders remain firm.
[ID:nTOE65T07D]

“The value of export orders was a bit better than
expectations. June after all is a normal light season, but the
value of orders keeps going up,” said Rehong Chuang, economist
at Sinopac Holdings in Taipei.

“It looks like the orders from mainland China and the
United States still aren’t too bad.”

Growth rates are also easing as the low base effect which
magnified year-on-year comparisons starts to fade. World trade
collapsed during the global financial crisis and only began to
show some signs of reviving in the middle of last year.

The data is unlikely to alter the outlook for interest
rates in Taiwan. The central bank began raising rates last
month from a record low 1.25 percent and is expected to bump
them up gradually through next year.

Stock Market Trading

(Additional reporting by Roger Tung and Jeanny Kao in Taipei,
Jun Ebias in Hong Kong, Nopporn Wong-Anan in Singapore and
Karen Lema in Manila)

UPDATE 1-Taiwan June export order growth slows as China cools