New bird flu strains to put pressure on local stocks

By Zane Kheir, The China Post

TAIPEI, Taiwan — New H5N2 and H5N8 strains of bird flu recently discovered in Southern Taiwan are putting pressure on consumer confidence and the food industry, according to analysts. Drawing on their previous experience of bird flu outbreaks, analysts said that in the case of rapid transmission during a bird flu epidemic, consumer willingness to purchase poultry products, including lunch boxes, fried chicken, hot pot, etc. is directly affected, hurting the local food business.

Due to decreased demand from consumers, restaurants in turn purchase fewer supplies. Domestic businesses have reported in the past that prices for chicken have decreased by 10 to 20 percent. Domestic business owners have indicated that if the epidemic is brought under control quickly, its effect on their business will be limited and restaurants will be back to normal operations by the Lunar New Year season. Commentators believe that because of the advantages of larger brand names, the impact on smaller firms is likely to be greater.

Financial Supervisory Committee (FSC) Chairman Tseng Ming-chung (���ʩv) stated that the committee will continue to pay close attention to how the bird flu is affecting the Taiwanese stock market. Minister of Finance Chang Sheng-ford (�i���M) stated yesterday morning before attending an FSC meeting at the Legislative Yuan. In regard to the outbreak affecting the Taiwanese stock market, he believes these factors are all part of the risks that are part of the stock market. It will certainly put some pressure on the stock market, Chang said.

To gain an understanding of how much of an effect it will have, one must see how well authorities are containing the situation before making a judgment, claimed Chang. Tseng stated that last Friday the U.S. stock market fell by 170 points, while European stocks fell 20-30 points, which is not a huge drop. The FSC will have to take a closer look to see how the epidemic will affect the domestic Taiwanese market in the upcoming months. With regard to the drop in global oil prices, Tseng stated that there are both benefits and disadvantages to the decline. The drop in costs will support imports and exports, which in turn helps the economy grow, according to Tseng. However, there is a serious negative risk in that oil-exporting nations are at risk of facing a financial crisis if prices continue to decline. CPI Could Increase by 0.072% If Poultry Costs Increase: DGBAS The Directorate General of Budget, Accounting and Statistics (DGBAS, �D�p�B) stated that if prices were to rise by 10 percent or more, the affect could be an additional increase of 0.72 percent to the consumer price index (CPI).

Tseng stated that he does not expect to see a noticeable price increase going into the Lunar New Year season, provided the epidemic is contained quickly.

A representative from DGBAS commented that the results from a price statistics survey show that the outbreak has not had a significant impact on domestic prices of poultry so far. The results from next month’s survey should show the affect of the epidemic on CPI more accurately.