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Talk of the Day -- Investor confidence slumps to three-year low

2012/05/09 22:16:00

Confidence among Taiwanese investors has plunged to a three-year low due to a combination of domestic and foreign factors, according to the results of a survey released by JP Morgan Asset Management Taiwan Ltd. Wednesday.

The Investor Confidence Index for Taiwan compiled by the financial service provider plummeted to 86.5 points in April, down 25.8 points from the figure recorded in February.

It was also the index's lowest level since April 2009 when the 2008-2009 global economic recession hit its bottom.

JP Morgan executives said the latest survey data pointed to fragile local investor confidence.

The following are excerpts from the local media coverage of latest developments in domestic economic situation and investor confidence:

United Evening News:

JP Morgan conducts a survey on Taiwanese investor confidence once every quarter. Its investor confidence index hit a high of 130.2 early last year, but the index then declined steadily until February this year.

The index staged a slight rebound in the February survey thanks to rising optimism about domestic and global economic outlook. Optimistic sentiments, however, receded soon amid changing economic situations at home and abroad.

Sharp increases in fuel prices in early April, looming hikes in electricity rates and the proposal to reinstate stock capital gains tax on individual investors have adversely affected investor confidence, JP Morgan executives said, adding that global economic uncertainty has further dampened investor confidence.

On Wednesday, the Taiwan Stock Exchange's benchmark index fell below the psychologically important 7,500 points to close at 7,475.71.

Alex Chio, a JP Morgan senior executive, said the results of the company's latest survey show that local investors are very sensitive about domestic investment climate.

"Issues about fuel and electricity prices adjustment have sparked inflationary concerns among investors and stock capital gains tax controversy have further undermined their investment interest," Chio said.

In comparison, he said, local investors seemed to be less sensitive toward eurozone debt problems as the global economy sub-index was the only one of the six indicators gauged in evaluating local investor confidence that posted a modest gain of 3.5 point in the April survey.

All of the five other indicators -- the local stock market outlook, the local economy sub-index, the domestic political climate and cross-Taiwan, Strait relations, the domestic investment climate and the sub-index on prospects of portfolio gaining value in the coming six months -- posted negative growth.

Chio said the readings on the local stock market outlook and overall domestic economic prospects both shed more than 30 points to their lowest levels on record. (May 9, 2012).

United Daily News:

Taiwan posted a 4.7 percent year-on-year decline in exports in the first four months of this year, according to government statistics.

Worse still, Taiwan was the only Asian Dragon that saw negative growth in exports in the first quarter of this year.

Economics Minister Shih Yen-shiang said Tuesday his ministry is extremely concerned about the decline in exports -- the key growth engine of Taiwan's economy.

"The Bureau of Foreign Trade is sorting out the items that recorded biggest drops in exports and is analyzing the reasons behind the lackluster trade performances," Shih said, adding that senior economics and trade officials will hold a brainstorming session with industry executives and academics this weekend to work out new export promotion strategies. (May 9, 2012).

(By Sofia Wu)