Taipei–A booming stock market has boosted local consumer confidence, helping the consumer confidence index (CCI) for February to rebound from a four-year low, according to National Central University (NCU).
Citing the results of a survey, the university said that the February CCI rose 3.28 points from a month earlier to 77.63 after local equity prices extended gains since the beginning of this year from a year earlier.
The weighted index on the Taiwan Stock Exchange has gained about 4.6 percent so far this year after a 10.98 percent increase for 2016. The local main board closed at 9,674.78 points on Wednesday and continued to advance Thursday on the back of a rally on Wall Street overnight.
Dachrahn Wu (???), director of the NCU’s Research Center for Taiwan Economic Development, said that the significant showing in share prices bolstered local consumer confidence in the equity market, as well as the entire consumer confidence, with many investors embracing high hopes that the weighted index will challenge the 10,000-point mark soon.
The index consists of six indicators reflecting how much confidence people have in consumer prices, employment, family finances, the local economic climate, the stock market and the possible purchase of durable goods in the coming six months.
As a result, the sub-index for the stock market over the next six months rose 20.60 points to 87.10, and the month-on-month increase was the third highest on record, only trailing a rise of 47 points in December 2001 and a rise of 23.6 points in July 2009, according to NCU.
Wu said that the performance of the stock market is a barometer of the economy, so that as Taiwan’s exports — which account for about 60 percent of the total gross domestic product — made a comeback by posting a year-on-year increase in the third quarter of last year, many consumers became upbeat about the economic fundamentals.
But the economist warned that judging by the fluctuations in the sub-index for the stock market in the past, whenever the figure breaches the 85 point mark, it is possible for it to make a correction.
The gains in the sub-index for the local stock market were almost the highest increase among the six sub-indexes in February, followed by the sub-index for the local economic climate, which rose 0.25 points from a month earlier to 71.65, and the sub-index for consumer prices, which added 0.10 points to 45.50.
Bucking the upturn on the CCI, the sub-index for employment for February fell 0.60 points from a month earlier to 100.30, and the sub-index for family finances also dropped 0.60 points to 76.30, while the sub-index for the timing for the purchase of durable goods also lost 0.05 points to 84.95, the survey shows.
According to NCU, a sub-index score of between 0 and 100 indicates pessimism, while a score of between 100 and 200 indicates optimism. Therefore, the results show that among the six sub-indexes, only respondents to the employment factor appeared upbeat over the next six months.
The CCI survey, conducted Feb. 21-23, collected 2,427 valid questionnaires and had a confidence level of 95 percent and a margin of error of plus or minus 2.0 percentage points.
Source: Focus Taiwan News Channel