August Leading Index (LI), which monitors the economic performance in advance, rose 1.9% to 120.3 points from 118.1 points in September. It was supported by gains from real imports of semiconductors (0.5%) and also the number of approved housing units (0.7%) as well as new companies registered (0.6%).

We expect the economy to remain healthy in 2017, underpinned by export-oriented industries namely semiconductors and resource-based activities, and positive contribution from domestic activities given the improving sentiments. Apart from the positive LI outlook, we found the banking industry loans grew at a firm pace of 5.8% y/y in Aug 2017 coming from non-household loans with household loans growth continuing to be stable. We reiterate our 5.7% – 5.9% GDP outlook for 2017 and project the GDP would expand by 5.5% in 2018.

• August Leading Index (LI), which monitors the economic performance in advance, rose 1.9% to 120.3 points from 118.1 points in September, suggesting the economic outlook continues to stay positive buoyed by export-led activities namely from the semiconductors segment and improving domestic activities. We see a positive outlook in areas like real imports of semiconductors (0.5%), number of approved housing units (0.7%) and new companies registered (0.6%) in the August LI.

• Meanwhile, the Coincident Index (CI), which examines the current economic activity, eased by 0.4% m/m to 131.3 points in August 2017. The drag came from lower retail trade volume (-0.3%), weaker manufacturing capacity utilisation (-0.2%) and drop in jobs created from manufacturing sector (-0.2%). However, the CI rose 4.5% y/y which in turn is in line with the GDP growth of 5.8% in 2Q2017.

• We expect the domestic economy to remain healthy in 2017. Apart from being supported with exports-oriented industries namely semiconductors and resource-based activities, we foresee positive contribution from domestic activities given the improving sentiments.

Apart from the positive LI outlook, we found the banking industry loans grew at a firm pace of 5.8% y/y in Aug 2017 coming from non-household loans with household loans growth continuing to be stable. We noticed an improvement in working capital loans, personal loans and loans for purchase of securities. We reiterate our 5.7% – 5.9% real GDP outlook for 2017 and project the GDP would expand by 5.5% in 2018.

Source: AmInvest Research - 25 Oct 2017