May Leading Index (LI) suggests some signs of softening are evident in 3Q2018 after it fell by 0.7% y/y to 117.8 points. Meanwhile, the Coincident Index (CI), which grew 2.2% y/y to 133.7 points in May, indicates the 2Q2018 GDP performance should be stronger than 1Q2018.

Factoring in the key macro data for the first two months of 2Q2018 such as industrial production, manufacturing sales, exports, imports and loans approved, we are optimistic 2Q2018 GDP should perform better than 1Q2018. Our preliminary estimate suggest 2Q2018 GDP could expand between 5.5% and 5.7% versus 5.4% in 1Q2018. Meanwhile, our full-year GDP growth remains at 5.5% with the lower end at 5.3%.

• The Leading Index (LI), which unveils the forward looking economic expectation, fell 0.7% y/y to 117.8 points, suggesting the potential economic outlook could take a slight breather sometime in 3Q2018. Meanwhile, the Coincident Index (CI), which tells us the current state of the economy, grew 2.2% y/y to 133.7 points in May.

• We expect the economy to perform better in 2Q2018 from 1Q2018. Manufacturing sales climbed on average by 6.9% y/y for the first two months of 2Q2018 against 6.5% in 1Q2018. Exports rose 8.7%y/y for the first two months of 2Q2018 against 6.0% y/y in 1Q2018, while imports gained 4.6% compared to -0.3%y/y in 1Q2018 and loans approved averaged 11.1% y/y versus 4.9% y/y in 1Q2018, largely from business loans which grew 28.2% y/y compared to 0.2% y/y in 1Q2018.

• Factoring in the key macro data for the first two months of 2Q2018, we are optimistic the 2Q2018 GDP should perform better than 1Q2018. Our preliminary estimates suggest the 2Q2018 GDP could expand between 5.5% and 5.7% versus 5.4% in 1Q2018. Meanwhile, our full-year GDP growth remains at 5.5% with the lower end at 5.3%.

Source: AmInvest Research - 24 Jul 2018