Taiex's mid-April plunge sends consumer confidence to 1-year low

Taipei, April 29 (CNA) A major plunge in Taiwan's stock market on April 19 sent the country's consumer confidence index (CCI) in April to its lowest level in a year, National Central University (NCU) said Monday in presenting its latest CCI results.

The April CCI, based on a survey conducted April 18-21, fell 10.14 points from a month earlier to 63.37, the lowest since April 2023 when it was 63.18.

The CCI gauges the level of confidence people have in consumer prices, the local economic climate, the stock market, their likelihood of purchasing durable goods and their employment prospects and family finances over the next six months.

Out of the six factors, the sub-index for the stock market, plunged by 38.76 points from a month earlier to 24.65 in April, the lowest level since February 2023, when the sub-index was 24.00.

The fall in the stock market sub-index in April was the steepest among the six factors.

Speaking with reporters, NCU Economic Research Center director Dachrahn Wu (吳大任) said consumer confidence crashed in April because of the deep slide in the local stock market that occurred as the survey was being conducted.

On April 19, the Taiex, the Taiwan Stock Exchange's benchmark weighted index, closed down 774.08 points, the biggest ever single-day drop, and fell by as much as 1,009.32 during the trading day, the second biggest intraday fall on record.

April 19: Taiex registers record single-day drop

April 18: TSMC Q1 net profit up 8.9% year-on-year

Wu said the stock market represents a leading economic indicator, and therefore when the Taiex plummeted, confidence in the economy weakened accordingly.

The Taiex's heavy losses on April 19 reflected a sell-off in contract chipmaker Taiwan Semiconductor Manufacturing Co. after the company cut its 2024 sales guidance for the entire semiconductor sector a day earlier.

But the company left its own sales target unchanged, saying that revenue was expected to rise 21-26 percent in 2024 in U.S. dollar terms.

The tumble also came amid escalating tensions in the Middle East and uncertainty over when the U.S. Federal Reserve will start to cut interest rates.

The Taiex ended below the critical 20,000-point mark to close at 19,527.12 that day, but rebounded back above 20,000 points three trading sessions later.

On Monday, the Taiex closed up 1.86 percent at 20,495.52, though Wu warned of potentially more volatility ahead.

April 29: Taiwan shares end at almost 20,500 points following U.S. rally

The other five sub-indexes that comprise the CCI also took a tumble from the previous month. Among them, the sub-indexes on employment and family finances fell 5.69 and 4.85, respectively, to 64.72 and 74.65 in April.

The sub-indexes for the local economic climate, durable goods purchases and consumer prices also fell by 4.08, 4.04 and 3.47, respectively, to 79.60, 107.80 and 28.78 in April, the survey found.

In the NCU surveys, a CPI sub-index score of 0-100 indicates pessimism, while a score of 100-200 shows optimism, the university said, noting that the only factor that showed optimism in April was the likelihood of purchasing durable goods over the next six months.

Also in April, another NCU survey conducted jointly with Taiwan Realty showed a month-on-month fall of 3.49 points in the index for home buying, which stood at 102.77.

The university's CCI survey in April collected 2,905 valid questionnaires from consumers in Taiwan aged 20 and over. It had a confidence level of 95 percent and a margin of error of plus or minus 2.0 percentage points.