Public confidence in the economy and stock investment took a downturn this month as downside risks over Europe’s outlook heighten and food safety scandals at home unnerved consumers, a survey by Cathay Financial Holding Co (國泰金控) showed yesterday.
A total of 30 percent of the respondents expect the economy to deteriorate in the coming six months, up from 23.3 percent last month.
“The softening sentiment exists because the food safety scandal has obscured healthy economic fundamentals,” Achilles Chen (陳欽奇), assistant manager at the company’s economic research department, said by telephone.
Major economic barometers — exports, unemployment and consumer prices — all give the appearance of a nation on track to economic recovery, but a majority of the respondents, 55.2 percent, expressed concerns that policy uncertainty and government inefficiency might drag down economic performance moving forward, Chen said.
About 36 percent think the TAIEX will drop in the next six months, while only 27 percent believe the index is set to go up, the survey said.
Consequently, 25.5 percent plan to cut stock investment this month, compared with 18 percent who intend to increase stakes, the survey said.
Most respondents, 56.3 percent, said they would keep their position unchanged.
The local bourse shed another 1.4 percent to hit an eight-month low of 8,512.88 points yesterday, as more investors opted out amid headwinds at home and abroad, Allianz Global Investors Taiwan analyst Sunny Chung (鍾兆陽) said.
Chung attributed the slump to Europe’s lackluster economy and Microchip Technology Inc’s warning of a broad-based industry downturn.
Altogether, the TAIEX tumbled 5.06 percent this week and 7.42 percent over the past month, according to Taiwan Stock Exchange data.
About 34 percent of those surveyed expressed a decreased desire for durable goods consumption over the next six months, while 18.5 percent indicated a stronger interest and 48 percent said they would hold their spending steady.
The consumption plans buck expectations of easing inflationary pressures after oil prices have declined somewhat, Chen said.
Meanwhile, home buyers and sellers expressed a preference to stay on the sidelines as 77.1 percent of the respondents said it is unwise to buy houses now and 43 percent said it is not the right time to sell either, the survey said.
The government’s plans to raise tax burdens on capital gains from property transactions have fueled price fall expectations and slowed the market, and the trend is likely to persist until policy uncertainty settles, Chen said.
The Ministry of Finance has said it could draw up tax reform bills by the end of this year that might subject capital gains from property transactions to a 45 percent income tax.
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