Fri, Aug 03, 2012 - Page 13 News List

Nation’s financial conditions did not improve last month: Cathay Financial

By Amy Su  /  Staff reporter

The nation’s financial conditions did not improve as much as expected last month because of slower-than-expected momentum in the equity market, Cathay Financial Holding Co (國泰金控) said on Wednesday, citing the latest results from its financial conditions index (FCI).

Meanwhile, the downside risk pertaining to the global economy may lead Taiwan’s composite monitoring indicators for the economy — issued by the Council for Economic Planning and Development every month — to continue flashing a “blue” light, meaning sluggish economic activity, for at least 10 months in a row, from the current record of eight straight months, Cathay Financial added.

The FCI, co-developed with National Taiwan University, aims to offer a snapshot of the nation’s financial conditions based on data from domestic bonds, equities, foreign exchange and overnight lending markets. The index’s base is 2003.

With a reading of 107.5 points last month, down from 109.4 points in June, the index still indicated tightening financial conditions, according to Cathay Financial, the nation’s largest financial services provider.

Cathay Financial said it thought the nation’s financial conditions could improve to a “steady” level at the earliest last month, with the government’s composite monitoring indicators for the economy moving away from the “blue” light.

However, the stock market momentum did not show any significant positive signs last month, with the average daily turnover remaining below NT$70 billion (US$2.33 billion), which dragged down the nation’s financial conditions.

The continuing global economic uncertainties — such as the economic contraction in the eurozone, and the slowing economy in the US and China — also struck down the rebounding momentum of the nation’s leading economic indicators. As a result, economic monitoring indicatorswould continue to flash a “blue light” in the near future.

Cathay Financial said the nation’s financial conditions may improve this month if the public’s confidence in the stock market rebounds.

The financial services provider maintained the view that Taiwan’s GDP may grow 2.45 percent this year, with an interval forecast of between 1.8 percent and 2.9 percent.

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