Confidence in Taiwan’s economy continues to improve: Cathay Financial

Confidence in Taiwan's economy continued to improve in November as investors turned more upbeat about a possible deal between the United States and China to resolve their trade disputes, according to Cathay Financial Holding Co. (Pixabay)
Confidence in Taiwan's economy continued to improve in November as investors turned more upbeat about a possible deal between the United States and China to resolve their trade disputes, according to Cathay Financial Holding Co. (Pixabay)

TAIPEI (CNA) — Confidence in Taiwan’s economy continued to improve in November as investors turned more upbeat about a possible deal between the United States and China to resolve their trade disputes, according to Cathay Financial Holding Co.

Citing a survey conducted from Nov. 1-7, Cathay Financial, one of the leading financial holding firms in Taiwan, said 33.3 percent of the respondents thought the local economy was doing worse than six months earlier, while 29.3 percent thought it had improved.

That translated into an optimism index for the current economic condition of minus 3.5 in November, sharply up from minus 15.1 in October, the survey found.

The economic optimism index for the next six months also rose sharply from minus 17.8 to minus 4.0 in November, the survey indicated.

In November, both of the indexes reached a new high for the past six months, Cathay Financial said.

The survey was conducted after Washington and Beijing resumed high-level trade negotiations in October, which raised hopes that the two sides would sign a phase one agreement to reduce bilateral tensions and eventually mitigate the impact on the global economy.

In addition to a more upbeat mood toward global trade, Cathay Financial said, faith in the local economy was also boosted by recent local economic data, which pointed to brighter economic fundamentals.

According to the National Development Council (NDC), the top economic planning agency in Taiwan, the country’s economic leading indicators, which predict economic performance over the next three to six months, moved higher for the ninth consecutive month in September. The NDC is scheduled to release the October data next week.

With sentiment toward the economy improving, the survey showed, the optimism index for the current job market rose from minus 28.5 in October to minus 23.9 in November, while the optimism index for the job market over the next six months also grew from minus 26.4 to minus 21.1.

Cathay Financial said an upbeat outlook about the economy was also reflected in wage hike hopes, with the index gauging expectations of a wage increase over the next six months rising from 3.0 in October to 3.4 in November, the highest level so far this year.

The optimism index for the purchase of big ticket items such as cars and homes meanwhile rose to 6.4 in November from 4.8 in October, while the index for durable goods purchases also inched up slightly from minus 14.0 to minus 13.5, the survey showed.

The stronger sentiment toward the economy lifted investor faith in equity prices, with the optimism index for the local stock market up from minus 9.7 in October to minus 3.0 in November, the highest so far this year, Cathay Financial said.

It added that such an upbeat mood also came after the weighted index on the Taiwan Stock Exchange breached the 11,000-point mark in October.

The index gauging investors’ appetite for risk in their investments also moved higher, up to positive 1.5 in November from minus 1.8 in October, the survey found. The November figure was also the highest so far this year.

Respondents to Cathay Financial’s November survey pegged Taiwan’s 2020 economic growth at 2.3 percent on average with 79.2 percent of the respondents expecting the growth will top 2 percent in the year.

The expectation, however, was still shy of the government’s forecast of 2.58 percent made in August.

The survey collected 12,730 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are 100 percent owned by Cathay Financial.