Public confidence in the economy has weakened further after the government’s business monitoring system was “yellow-blue” for the second straight month, fueling concerns over an economic slowdown in the second half of this year, a Cathay Financial Holding Co (國泰金控) survey released yesterday showed.
Nearly 40 percent of respondents said they expect the economy to soften in the next six months, while 21.5 percent said it would improve and the remainder expected it to remain unchanged, the survey found.
The cautious sentiment came after the nation’s leading and coincident index series pointed slightly downward over the past two months, affirming that the pace of economic recovery has slowed, Cathay Financial economic research department assistant manager Achilles Chen (陳欽奇) said.
“It remains to be seen whether the growth momentum will pick up going forward after losing some steam last quarter,” Chen said.
Fortunately, respondents indicated a modest increase in consumption of big-ticket items and durable goods, the online survey of 17,517 Cathay Financial clients found.
Chen attributed the uptick in buying interest to a rally on the local bourse to above the 10,000-point mark, but said the wealth effect is not evident because foreign investors dominate the market’s direction.
A total of 42.4 percent of respondents said they expect the TAIEX to peak at about 10,500 points in the second half and 20.8 percent believe that the benchmark index might challenge the 11,000-point level, while 3.3 percent said it would reach 12,000 points, the survey found.
The results suggest a conservative sentiment, as Taiwan Stock Exchange data showed that the main index yesterday closed up 0.24 percent at 10,506.1 points.
The majority of respondents, 54.8 percent, said they would not channel more cash into equities, while 27 percent plan to slash their positions and 18.2 percent intend on increasing their holdings, the survey found.
More than three-quarters of respondents said they expect consumer prices to climb in the next six months, while 80 percent said they have already felt the effects of rising costs in the past six months.
Various sectors have increased charges after the government introduced new labor rules that require more annual leave and greater overtime pay.
The survey also found that 72.1 percent of respondents said it is not a good time to buy real estate, while 60.7 percent believe it is not wise to sell.
The findings signal sluggish buying interest, giving buyers the upper hand in negotiations, Cathay Financial said.
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