The consumer confidence index this month dropped to its lowest level in 14 months, dragged by a drastic retreat on stock investment after the TAIEX tumbled 13.53 percent without any sign of stabilization, a National Central University survey showed yesterday.
The index fell 1.52 points to 81.95 from a month earlier, with all six constituent measures losing value, the monthly survey showed.
The sub-index on stock investment slumped 5.2 points to 85.3, with most respondents saying it would be ill-advised to invest in local shares for the next six months.
Only 39 percent expressed optimism.
The local bourse had its share of corrections this month, falling below the 10,000-point mark on Oct. 11 after showing resilience earlier amid a rout in emerging markets and currencies globally.
“The readings next month will shed light on the situation,” said Dachrahn Wu (吳大任), director of the Research Center for Taiwan Economic Development, the university entity that conducts the survey.
“Persistent stock retreats would have a negative effect on household income and public confidence in the domestic economy,” Wu said.
Softening confidence regarding household income and the economy would inevitably weigh on private consumption, which is essential to drive growth in the second half and next year, when exports are predicted to slow, Wu said.
The TAIEX had been above 10,000 points for the past 15 months, lending support to the wealth effect and muting the pain of pension reforms, Wu said, adding that people might tighten their belts now that the buffer is gone.
The job market outlook reading fell 1.1 points to 100.9, while the sub-index on household income dropped 0.75 points to 86.65, the survey showed.
Scores of less than 100 suggest pessimism, while values above the threshold indicate optimism.
Respondents expressed less confidence in the economy, with the gauge down 0.8 points to 81.9 as major technology firms cut spending over concern that the US-China trade war would affect demand.
People expressed less confidence in purchasing durable goods — mainly real-estate — with the sub-index falling 0.75 points to 90.4 this month, it said.
The inflation measure dropped 0.5 points to 46.55, meaning most respondents were not happy with consumer prices, the survey showed.
The survey polled 2,715 adults by telephone between Oct. 19 and Tuesday last week with a margin of error of 2 percentage points.
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