Investor confidence in the local economy improved in February with sentiment toward the equity market also growing, according to Cathay Financial Holding Co.
Citing a survey conducted from Feb. 1-7, Cathay Financial, one of the leading financial holding firms in Taiwan, said although National Development Council data released in early February showed the local economy remained in contraction mode for the second consecutive month in December, 37.3 of respondents in its poll believed the local economy would improve over the next six months, while 37.2 percent said the economy would deteriorate.
The figures translate into an economic optimism index for the next six months of about 0.2 in February, sharply up from minus 29.3 recorded in January.
The index gauging optimism over current economic conditions also rose from minus 41.3 in January to minus 10.1 in February, the survey found.
The improving sentiment toward the local economy is in line with growing optimism toward the local equity market which staged a significant rebound in November, when the Taiex, the weighted index on the Taiwan Stock Exchange, soared 1,127.51 or 7.98 percent, in January, in the wake of a rally on global markets amid eased concerns over the rate hike cycle by the U.S. Federal Reserve.
In February, the poll showed, the stock market optimism index rose to 11, up sharply from minus 20.6 in January, while the index assessing appetite to take risks in the stock market also went up from minus 1.8 to 10.5.
With improving sentiment toward the local economy, Cathay Financial said, the index gauging consumers’ willingness to buy big ticket items such as cars rose from minus 2.5 in January to 8.9 in February.
In addition, the index assessing the current local job market rose from minus 31.6 in January to minus 18.7 in February, while the index gauging the job market over the six months rose from minus 27.6 a month earlier to minus 15.4, the survey showed.
In February, the index assessing current wage growth rose from minus 3.4 in January to 4.0 in February, with the index expecting wages to grow over the next six months rising from minus 0.7 to 3.9 over the same period, the survey indicated.
After the Legislative Yuan passed amendments to the Equalization of Land Rights Act in January, aimed at curbing speculation in the property market, sentiment appeared divided over home selling and buying in the February poll.
According to the survey, the index assessing interest in selling homes fell from minus 19.3 in January to minus 20.6 in February, while the index evaluating willingness to buy homes rose from minus 57.8 in January to minus 54.1 in February.
Respondents in the February survey pegged Taiwan’s 2023 gross domestic product growth at 2.2 percent, up from 2.1 percent in a similar survey in January, with 63 percent saying they expected annual growth to top 2 percent.
That appeared slightly more upbeat than the Directorate General of Budget, Accounting and Statistics (DGBAS), which forecast earlier this month that Taiwan’s GDP will grow 2.12 percent in 2023, a drop of 0.63 percentage points from its previous estimate made in November, saying weakening global demand will affect the export-oriented local economy.
In the February survey, respondents expected growth in the local consumer price index (CPI) to reach 2.3 percent in 2023, unchanged from the January poll, while about 64 percent expected the CPI to average over 2 percent for the whole year.
The DGBAS forecast CPI of 2.16 percent in 2023, a rise of 0.3 percentage points from its earlier estimate made in November.
The survey collected 19,750 valid online questionnaires from clients of Cathay Life Insurance and Cathay United Bank, which are wholly owned by Cathay Financial.
Source: Focus Taiwan News Channel