The nation's investor sentiment index dropped to minus 104.72 this month, the lowest since October 2005, when it hit minus 109.4, as a result of political bickering, weak global stock markets and foreign capital outflows, an economist said yesterday.
The bimonthly index dropped 102.59 points to minus 104.72 this month from minus 2.13 in October, making it not only the lowest level this year but also the second lowest since Dec. 2003, when the survey was first conducted by Shih Hsin University's Department of Finance.
The results showed that investors in general are not optimistic about the nation's stock market for the next three months.
The stock market saw a sudden decline from a seven-year high of 9,809.88 on Oct. 29, to below the key psychological level of 8,000 points last week.
Out of the total 1,119 valid responses, only 15.19 percent, or 170 investors said their return on the stock market this year was higher than 10 percent. About 50.85 percent, or 569 of the respondents, said they either did not make any money or lost money, while 23.15 percent said they had a negative return of more than 20 percent, 259 of the respondents.
Despite the sudden dramatic drop in the optimism index this month, Schive Chi (薛琦), guest speaker at Shih Hsin University's Department of Economics said surveys of this type were heavily influenced by news coverage during the interview period.
The results showed that 41.64 percent of the investors said they would increase their investment in the stock market if Chinese Nationalist Party (KMT) presidential candidate Ma Ying-jeou (馬英九) became president. While 42.52 percent of the respondents said they would decrease their investment if Democratic Progressive Party presidential candidate Frank Hsieh (謝長廷) was elected.
"Aside from the conflict between the nation's political parties, the deteriorating international economic situation also had a strong impact on the sharp decline in the optimism index this month," Schive said yesterday at a press briefing.
Chou Ji (周濟), professor in Shih Hsin University's Department of Economics, echoed Schive's statement.
"The two main reasons for the decline in Taiwan's investor sentiment this month are the upcoming legislative and presidential elections and the impact the US subprime mortgage crisis has had on global stock markets," Chou said.
The sudden sharp decline in stock prices over the last two months is actually a good opportunity for investors planning to enter the stock market, Andy Liang (梁永煌), president of the Business Today weekly magazine told reporters yesterday.
Although daily trading volume has dropped from a high-point of NT$300 billion this year to between NT$70 billion and NT$80 billion in recent weeks, the lowest volumes this year, Liang said investors who enter the stock market while trading volumes are low would become the winners.
"If investors pick stocks that are both profitable this year and have a good outlook next year and invest after the end of the legislative elections, they should be able to make a profit three months later," Liang said.
This month's survey, conducted over the telephone between Dec. 10 and Dec. 20, had a total of 1,119 valid respondents, with a 3 percent standard deviation. The interviewees were investors over 18 years of age that had been active in the stock market this year.
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