Taipei, Local confidence in Taiwan's economy rebounded in July in the wake of a truce in the trade war between the United States and China reached at the G20 summit by U.S. President Donald Trump and Chinese President Xi Jinping at the end of June, according to Cathay Financial Holding Co.
Citing a survey conducted from July 17, Cathay Financial, one of the largest financial holding firms in Taiwan, said 35.4 percent of respondents thought the local economy was doing worse than six months earlier, while 23.6 percent thought it had improved.
The poll data translates into an increase in optimism about current economic conditions, as reflected in the optimism index, which rose from minus 20.1 in June to minus 11.9 in July, Cathay Financial said.
In addition, according to the financial holding firm's poll, an economic optimism index for the next six months also rose from minus 16.6 in May to minus 7.0 in June.
On the sidelines of the G20 summit, Trump and Xi agreed not to increase trade tariffs on each other's goods, while allowing negotiations to continue to resolve their trade disputes.
Moreover, the U.S. president agreed to ease the ban against Chinese telecom equipment supplier and smartphone brand Huawei Technologies Inc., allowing U.S. tech companies to sell products to the Chinese firm.
Cathay Financial said such a development was factored into the latest survey with investors more upbeat about the economic climate right now and over the next six months.
In addition to the external factors, the leading indicator compiled by the National Development Council, which predicts the country's economic performance over the next three to six months, showed signs of rising, which also boosted sentiment in July, Cathay Financial said.
With sentiment toward the local economy improving, respondents also appeared more optimistic about Taiwan's job market over the next six months. The optimism index for employment rose from minus 24.4 in June to minus 23.2 in July, the survey found.
However, the optimism index for the current labor market, fell from minus 24.8 in June to minus 25.2 in July, according to the survey.
Under such favorable circumstances, confidence in the local equity market improved in July, in particular after local investors saw the S&P 500 index hit a new high amid optimism over the WashingtonBeijing trade issue, Cathay Financial said.
In the survey, the optimism index for the local stock market improved from minus 21.0 in June to minus 3.5 in July, while the index gauging investors' appetite for risk rose from minus 6.0 to minus 2.3.
The rebound in sentiment in the equity market in July was the highest this year, Cathay Financial said.
The financial holding company said about 25.6 percent of respondents expected the weighted index on the Taiwan Stock Exchange or the Taiex to pass 11,000 points in the second half of this year, up 20 percentage points from a similar survey conducted in January.
About 30.3 percent of respondents believe the Taiex will move between 10,500 and 11,000 points in the second half of the year.
On Friday, the Taiex closed down 0.45 percent at 10,891.98 points after a fall on U.S. markets.
The survey also found that the index gauging investors' appetite for risk in the equity market rose from minus 6.0 in June to minus 2.3 in July.
The results of the survey were based on 11,155 valid online questionnaires filled out by clients of Cathay Life Insurance and Cathay United Bank, which are 100 percent owned by Cathay Financial.
Source: Focus Taiwan News Channel