Thu, Dec 01, 2005 - Page 10 News List

Stronger bourse boosts consumer confidence

By Amber Chung  /  STAFF REPORTER

The nation's consumer confidence index recovered last month after having struggled for most of the year, boosted mainly by recovering investor sentiment on the local bourse, a survey showed yesterday.

The overall consumer confidence index for last month edged up to 74.11 points, up 1.52 points from last month, according to a monthly survey released yesterday by National Central University's Research Center for Taiwanese Economic Development. The survey polled 2,662 people aged over 20 nationwide between Nov. 18 and Nov. 23.

The index is compiled based on respondents' expectations for six areas in the next six months -- stock market performance, durable goods purchasing, consumer prices, employment, household finances and the domestic economy.

The sub-index for stock performance saw the largest rise among the five advancing sub-indices, gaining 3.6 points to 70.40, while the household finances index was the only one that declined, shedding 1.35 points to 61.65, the poll showed.

The stock performance sub-index was at its second-highest level this year, after hitting 70.70 points in August, as foreign investors returned to the buy side on the local bourse last month.

The TAIEX yesterday jumped 63.96 points, or 1.04 percent, to close at 6203.47 on turnover of NT$94.9 billion (US$22.83 billion).

Foreign investors bought shares worth a net NT$179.68 billion last month after they sold shares worth NT$30.84 billion in October.

Investors can expect more capital to be injected into the nation's stock market after state-owned Chunghwa Post Co Ltd (中華郵政公司) said yesterday that it plans to invest another NT$18 billion by the end of the year to galvanize the local market.

Chunghwa Post is allowed to invest amounts in the local bourse up to a limit of 10 percent of the NT$3.6 trillion worth of savings it manages.

This could be translated into a further investment of NT$220 billion on the top of its current investment of NT$140 billion.

Meanwhile, Morgan Stanley continued to be bullish about the local market.

The investment bank decided to "further increase our overweight in Taiwan," where it has seen improving global growth indicators, accommodative liquidity conditions and attractive valuation, despite gloomier-than-expected local investor sentiment, Morgan Stanley's Asia-Pacific strategist Malcolm Wood said in a report released yesterday.

Morgan Stanley raised its weighting of the market at the end of October on local companies' positive earnings, driven by a speeding up of the global growth momentum.

Morgan Stanley suggested that investors set their sights on Hon Hai Precision Industry Co (鴻海精密), the world's leading contract electronics manufacturer, in light of its expanding market share based on strong execution across multiple product lines, including personal computers, networking, consumer electronics and handsets.

The US investment bank also switched its investment pick from Fubon Financial Holding Co (富邦金控), the nation's third-largest financial group by assets, to smaller player SinoPac Financial Holding Co (建華金控), Taiwan's ninth-largest financial conglomerate, Wood said.

This was due to the disappointing deterioration in the credit quality of Fubon Financial's unsecured personal lending book, he said.

SinoPac Financial has the lowest exposure to unsecured personal lending, offers capital management by a 5 percent share buy-back, has a reasonable valuation and a 6.9 percent dividend yield, Wood said.

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