Optimism over economy plummets: industry survey


CNA

TAIPEI–Sentiment toward the local economy has plummeted as uncertainty over global economic fundamentals from overseas looms large, a survey released by Cathay Financial Holding Co. showed.

According to the survey, economic optimism for October fell sharply to a figure of 0.1 from September’s 13.4 after manufacturing activity in the U.S. and the eurozone showed signs of slowing down.

The U.S. Institute for Supply Management reported that the U.S. manufacturing purchasing managers’ index (PMI) for September dipped to 56.6 from August’s 59.0, while Markit Economics reported that the manufacturing PMI in the eurozone in September fell to a 14 month low of 50.5.

In addition to these external economic factors, Cathay Financial said, sentiment toward the local economy has been undermined by non-economic factors such as geopolitical unease related to Ukraine and fears over the spread of Ebola.

Despite a sharp fall in the October economic optimism index, a reading of above zero means that the number of respondents in the survey who remained upbeat is still higher than the number of respondents who turned pessimistic, Cathay Financial explained.

The survey indicated that 30.2 percent of respondents felt that the local economy has slowed down from six months ago, compared with 33.6 percent who felt the local economy improved.

Meanwhile 30 percent of the polled expected the local economy to weaken over the next half year, while 30.1 percent anticipated it will strengthen.

Investor sentiment toward the local bourse has also eroded after investors witnessed volatility in Taiwan and on Wall Street in recent sessions, Cathay Financial said.

Since the beginning of September, the weighted index on the Taiwan Stock Exchange fell 9.79 percent on a string of foreign institutional selling. The index closed at 8,512.88 points Friday.

As a result, the optimism index for the local exchange fell to minus 8.7 in October, the lowest level so far this year, from 9.2 recorded in September, Cathay Financial said.

The survey said that 35.7 percent of respondents forecast the local market will fall further over the next six months, while 27 percent of them expected shares to move up.