Thu, Feb 24, 2005 - Page 10 News List

Local investors remain pessimistic about market

By Joyce Huang  /  STAFF REPORTER

Local investors said they're not impressed with the stock market's recent rise and are pessimistic about the market's momentum over the next six to 12 months, according to an opinion poll released yesterday.

The bi-monthly survey conducted by Shih Hsin University's finance department and the Chinese-language Win Win Weekly (今周刊), showed the index of investor optimism dropped 14 points from a negative 28 points in December to negative 42 points this month -- the lowest in six months.

The index has been falling since last April when the TAIEX began a slow rise from about 4,500 points to as high as 5,989 points this month.

One pollster said the divergence between the sentiment index and the TAIEX is due to the fact that no institutional investors were polled.

"Low turnover in the stock market, triggered by several financial scandals, continues to upset local retail investors, who appear to have adopted a wait-and-see approach toward stock investments," said Kuo Min-hua (郭敏華), an associate finance professor at the university.

Investors are also concerned over the soon-to-be-launched pension system, which they fear may trigger heavy layoffs given than 81 percent of businesses are worried about increasing personnel costs, Kuo said.

Investors also took a negative attitude toward the implementation last month of a new accounting rule, Statements of Financial Accounting Standard 35, because that measure may curtail company earnings, Kuo said.

However, those with high incomes are less pessimistic, said Win Win Weekly's president, Andy Liang (梁永煌).

The survey also looked at stock investors' lottery-buying habits and found that most of the investors are also Lotto fans.

"Driven by a strong desire to get rich, stock investors who are also enthusiastic lottery buyers are usually rewarded with better capital gains in the stock market," Liang said.

The poll found that more than 58 percent of stock investors who received a 16 percent rate of return on investments also bought lottery tickets.

"The more they invest in stock shares, the more they buy lottery tickets," Liang said.

The survey polled over 1,000 stock investors between Jan. 26 and Feb. 4.

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