Fri, Jul 19, 2013 - Page 13 News List

Economic pessimism on the rise: Cathay report

By Crystal Hsu  /  Staff reporter

Public confidence in the economy weakened for the fourth straight month this month after the US Federal Reserve last month signaled it may wind down its quantitative easing (QE) program soon and as major domestic indicators showed tepid growth, Cathay Financial Holdings Co (國泰金控) said yesterday.

A monthly survey conducted by the company found that 35.1 percent of the respondents expect the nation’s economy to worsen in the next six months, while 26.1 percent have a brighter outlook, compared with 33 percent and 27.7 percent last month respectively.

Cathay Financial attributed the gloomier sentiment to unease over the US’ possible QE retreat in and the local economy’s extended “yellow-blue” rating in Council for Economic Planning and Development reports, signalling a transition between recession and growth.

The survey showed a significant increase in the amount of respondents who think now is the right time to sell property, which at 37.2 percent is the highest level recorded in the poll since the government introduced a special sales levy on luxury homes in 2011.

However, the number of people who were willing to buy property last month dropped to the lowest level this year at 15.4 percent, the survey showed, putting pressure on sellers to lower prices if they are eager to close deals.

The results followed news reports that the Ministry of Finance plans to tighten the luxury levy by shifting the tax to buyers rather than sellers of houses resold within two years of purchase.

There are also suggestions that the ministry should raise the levy on foreign buyers since they are one cause of the fast growth of property prices seen in Taipei, Hong Kong, Singapore and Sydney.

The ministry plans to revise the tax by the end of the year.

Meanwhile, more people expect the job market to deteriorate, with 42.8 percent of respondents saying they expect it to become more difficult to find jobs in the next six months, up from 40.8 percent a month earlier, the survey found.

Cathay said the figure suggests a sentiment of decreasing spending power, further reflected by 78 percent of those surveyed voicing concern that consumer prices would rise in the next six months.

About 40 percent of respondents indicated plans to cut durable goods purchases in the next six months, while 30.5 percent planned to reduce spending on big-ticket items, the survey showed.

The survey showed 77.8 percent of those polled felt now was not the right time to buy gold as prices were above US$1,000 an ounce. In addition, 52.3 percent said they would keep their stock holdings unchanged, while 30.3 percent voiced their intent to trim their positions and 17.4 percent had plans to buy.

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