Sentiment toward economy continues to improve: survey

Downtown Kaohsiung is pictured in this file photo from Oct. 5, 2017. According to a recent survey from Cathay Financial Holding, sentiment toward the local economy has continued to improve after a series of recent economic data pointing to better economic fundamentals. (CNA)

TAIPEI (CNA) – Sentiment toward the local economy has continued to improve after a series of recent economic data pointing to better economic fundamentals, Cathay Financial Holding Co. (國泰金控) cited a survey as saying Friday.

In the survey, 28.2 percent of the respondents said the local economy fares better now compared with six months earlier, while 30.9 percent said the economy has worsened from six months ago.

The figures are from Cathay Financial’s October economic optimism index on the current economic situation of minus 2.7, up from September’s minus 3.2. The October index was the highest since May 2015, when the figure stood at 23.

Cathay Financial said the rise in the index came after several think tanks upgraded their forecasts for Taiwan’s gross domestic product (GDP) growth for 2017. The Chung-Hua Institution for Economic Research (CIER) was the latest one to raise its forecast for Taiwan’s GDP growth to 2.18 percent from 2.14 percent for this year.

In addition, Cathay Financial said, the August economic composite index of monitoring indicators issued by the National Development Council flashed a green light, pointing to stable growth, an upgrade from a yellow-blue light in July, indicating sluggishness, so sentiment improved accordingly.

The Cathay Financial October economic optimism index on the fundamentals over the next six months fell slightly to minus 5.9 from September’s minus 5.7, but the composite economic optimism index for October still moved higher to minus 4.3 from minus 4.5 seen in September.

Due to a more optimistic mood on the local economy, Cathay Financial said, sentiment toward wage increases also improved, with the indexes on the current salary payment and wage hikes over the next six months hitting 0.8 and 5.7 in October, respectively, which marked the first time the two indexes had stayed in positive territory since July 2015.

Cathay Financial said the index for willingness to buy big ticket items over the next six months continued to rise in October to 4 from minus 0.1 in September.

However, sentiment toward the local equity market bucked the upturn in the overall sentiment toward the economy since investors have been bothered by lower-than-expected sales of the iPhone 8, the latest iPhone models unveiled by Apple Inc. in September.

The concerns over the iPhone 8 shipments have prompted investors here to unload many major Apple concept stocks in the local bourse in recent sessions. Taiwanese suppliers to Apple account for about 40 percent of the combined market capitalization on the main board and the over-the-counter market.

As a result, the optimism index on the equity market over the next six months fell to minus 17.2 in October from September’s minus 12.8. The October figure was the lowest in three months.

In addition, the index on the appetite to take risks in the equity market also fell to minus 4.8 in October from September’s minus 3.6, Cathay Financial said.

The survey, conducted during Oct. 1-7, collected 19,292 valid questionnaires online from clients of Cathay Life Insurance (國泰人壽) and Cathay United Bank (國泰世華), which are 100 percent owned by Cathay Financial. 

By Tien Yu-pin and Frances Huang