Stock optimism index hits two-year high: survey

Taipei--An index measuring optimism in Taiwan's stock market hit its highest level in two years in May at a time when the domestic economy seems to be on a path to recovery, Cathay Financial Holding Co. (???) said Tuesday.

Announcing the results of its latest monthly survey conducted from May 1 to 7, Cathay Financial said 34.5 percent of respondents thought Taiwan's stock market would move lower over the next six months, while 25.1 percent expected it to fare better.

The resulting minus 9.4 optimism index was the highest it has been since reaching minus 16 in May 2015, according to the survey.

Cathay Financial said growing confidence that Taiwan's gross domestic product (GDP) will expand at a faster pace in 2017 than the 1.50 percent growth seen in 2016 has left more investors upbeat about the market.

Also, with Apple Inc. expected to unveil a significantly upgraded next-generation iPhones in the second half of this year, Taiwanese suppliers could benefit from heavy replacement buying and see their shipments and bottom lines improve accordingly, Cathay Financial said.

Taiwanese suppliers to Apple account for about 40 percent of the combined market capitalization of Taiwan's main exchange and the over-the-counter market, with Taiwan Semiconductor Manufacturing Co. (???), a maker of the A11 processor for the new iPhones, remaining the most heavily weighted stock in the market.

The rise in optimism has made investors more willing to take risks, Cathay Financial said, as the index for investors' appetite for risk has improved over the past six months though it remained unchanged in May at minus 6.1.

In May, 19.0 percent of respondents said they were more willing to take risks in the stock market while 25.1 percent said they were less willing, resulting in a minus 6.1 index reading, up from minus 15 in November 2016.

The survey was conducted before the weighted index on the Taiwan Stock Exchange closed above the symbolic 10,000-point level on May 11 for the first time in 17 years.

In the survey, 25 percent of respondents said Taiwan's economy will improve over the next six months while 35.4 percent said economic fundamentals will get worse, which translated into an economic optimism index for May of minus 10, down from minus 8.2 in April, when the index moved higher for the third consecutive month.

Cathay Financial said the drop was not significant, however, since the survey also found that 49.8 percent of respondents believed Taiwan's economic growth for 2017 will top 2016's 1.5 percent mark, and 4.7 percent said growth will surpass 2 percent.

Several economic think tanks have upgraded their GDP growth forecasts for 2017 to more than 2 percent.

The survey collected 15,609 valid questionnaires online from clients of Cathay Life Insurance (????) and Cathay United Bank (????), which are 100 percent owned by Cathay Financial.

Source: Focus Taiwan News Channel