Consumer confidence at lowest level since May 2003

A combination of fluctuations in US stock markets, stricter scrutiny of domestic listed companies' earnings reports and the adoption of new accounting rules has weakened people's confidence in stock investments, which has dragged down this month's consumer confidence index, according to National Central University's monthly report.

According to the report, which was released yesterday, the consumer confidence index slid 2.01 points from last month to 73.12, the lowest level since May 2003.

The index gauges the public's expectations of stock performance, household finances, durable goods, job opportunities, consumer price fluctuations and the domestic economic outlook for the next six months.

Of the 2,064 respondents interviewed last week, 67.7 percent said they would stay away from the stock market in the near future, while only 17.6 percent appeared optimistic.

The report's author, Chu Yun-peng (朱雲鵬), attributed the weak consumer sentiment to drastic stock movements this month.

On March 15, the Dow Jones industrial average nosedived 191 points, resulting in the TAIEX shedding 173.21 points the following Monday, said Chu, who is also the head of the university's Research Center for Taiwan Economic Development.

"Consumers are sensitive to market variations, especially when they happen right before our survey was conducted," he said.

In addition, the implementation of stricter accounting rules -- Statements of Financial Accounting Standard No. 35 -- to promote transparency at traded companies has also sparked investor concerns and dragged down share prices, Chu said.

Day Jaw-yang (戴肇洋), deputy director of Research Division III at the Taiwan Research Institute (台綜院), noted that financial regulators, including the Financial Supervisory Commission, Taiwan Stock Exchange and Taiwan Futures Exchange, have reinforced regulations on companies' financial statements in the wake of the scandal surrounding Procomp Informatics Co (博達科技).

This has led to stock-transaction volumes remaining flat or even decreasing, Day said.

Shia Ben-chang (謝邦昌), professor of statistics and information science at Fu Jen Catholic University, urged the government to devise projects to reinvigorate the economy and curtail people's concerns over household finances.