Consumer confidence drops to 9-month low as stock market sentiment drops

Taipei, March 28 (CNA) Consumer confidence in Taiwan fell to a nine-month low in March as investor confidence in the stock market was affected by a geopolitical crisis and rising interest rates in the home and abroad, the National Central University (NCU) said on Monday.

Citing a survey, NCU said the Consumer Confidence Index (CCI) fell 0.95 points from the previous month to 72.24 in March, the lowest since June 2021, when the index s stood at 70.48.

The CCI measures people’s level of confidence regarding job prospects, family finances, consumer prices, the local economic climate, the stock market and the likelihood of buying durable goods in the next six months.

According to the survey, the stock market sub-index fell to 45.9 in March, down 3.8 from the previous month, the largest decline among the six factors of the CCI,

Dachrahn Wu (吳大任), director of the NCU’s Research Center for Taiwan Economic Development, told reporters that Russia’s invasion of Ukraine had exacerbated already strong inflationary pressure, which undermined confidence. equity investors.

According to Taiwan’s central bank, the growth of the local consumer price index has been above 2%, the alert threshold, for several months, and this is expected to continue in the third quarter of this year.

The central bank expects local CPI growth to fall below 2% in the fourth quarter, although it raised its growth forecasts for the national CPI and core CPI, which exclude fruits, vegetables and energy, from 1.59% and 1.45% to 2.37% and 1.93%, respectively, this year.

Wu said after the U.S. Federal Reserve raised key interest rates by 25 basis points on March 16, kicking off a cycle of rate hikes to curb inflation growth, the local central bank followed suit. the next day by also increasing its discount rate by 0.25%. points.

In addition, the Fed also announced a planned reduction in its balance sheet starting in May by selling bonds in the market, a decision that should recover more funds and further reduce liquidity.

“As a result of tighter monetary policies at home and abroad, local investors are facing flight of funds and rising costs to borrow money, so their confidence has been shaken” , Wu said.

In March, the sub-indices for the probability of purchasing durable goods and the local economic climate also fell by 3.4 and 0.5 points respectively from the previous month to 122.4 and 89.5.

Wu said that despite the fall in the local economic sentiment sub-index, Taiwan is expected to see continued export growth momentum from last year to this year and benefit from an increase in private consumption.

However, Wu said, as the number of indigenous COVID-19 cases has increased, it’s worth looking at how the disease is affecting confidence in local economic growth.

Contrary to the slowdown, the employment, family finance and consumer price sub-indices increased by 1.45, 0.45 and 0.1 respectively from the previous month to 66.75, 78, 35 and 30.55 in March, according to the survey.

A sub-index score of 0 to 100 indicates pessimism, while a score of 100 to 200 indicates optimism, NCU said, noting that optimism was seen in March only in the sub-index. the likelihood of buying durable goods over the next six months. .

In addition, the home purchase timing index for March fell 3.5 from the previous month to 119.35, NCU said.

Commenting on this particular index, Chou Ho-ming (周鶴鳴), senior vice president of Taiwan Realty, said the drop largely reflected recent government measures to limit rising house prices.

The December NCU survey collected 2,794 valid questionnaires from local consumers aged 20 and over. It had a confidence level of 95% and a margin of error of plus or minus 2.0 percentage points.

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