Sat, Oct 19, 2013 - Page 13 News List

Political turmoil lowers confidence in economy

By Crystal Hsu  /  Staff reporter

The political standoff at home and in the US weakened the public’s confidence in the domestic economy this month, but the sentiment may improve now that the wrangling has settled, a Cathay Financial Holdings Co (國泰金控) survey found.

About 48.8 percent of the respondents this month expect the nation’s economy to worsen in the coming six months, from 41 percent one month earlier, as the executive and legislative branches remain at loggerheads in Taiwan and the US, unnerving financial markets across the world, the survey showed.

“Of those polled, 64.6 percent linked the deteriorating sentiment to prolonged partisan disputes at home and 53.9 percent voiced concerns the drama will weigh on the stock market,” Cathay Financial economic research department assistant manager Achilles Chen (陳欽奇) said in the monthly report.

The public is also worried about the rows between the US Congress and the White House and assign less importance to downside risks elsewhere, though stock markets in emerging economies such as India and Brazil are volatile these days, Chen said, citing the survey.

Cathay Financial, Taiwan’s largest financial services provider by assets, said that the economy may improve next year if different government branches are able to strengthen their communication and cooperation, the report said.

The sour political climate drove 41.1 percent of respondents to think it is wise to take profits on real-estate investments, the highest in 30 months, but 74.8 percent consider it ill-timed to buy property now, the survey indicated.

The wide gap suggests a deadlock unless sellers are willing to soften prices, the report said.

As for risk appetite, 37.8 percent of respondents expect the TAIEX to fall in the coming six months, compared with 20.5 percent with bullish views, the survey said.

Consequently, 51.9 percent plan to maintain their portfolios, while 32.9 percent intend to trim risky assets and only 15.2 percent plan to build up positions, according to the survey.

The survey successfully polled 27,500 Cathay Financial customers via e-mail between Oct. 1 and Oct 7, the report said.

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