Taiwan’s investor confidence weakens: survey

Investor confidence in Taiwan weakened in the fourth quarter from a quarter earlier to near an all-time low, according to the results of the Investor Confidence Index (ICI) Survey released Thursday by J.P. Morgan Asset Management Taiwan.

In the latest ICI Survey, the investor confidence index for the October-December period fell 4.5 from the previous quarter to 81.0.

J.P. Morgan said the weakening investor confidence reflected worries over the local economic and political climate, in particular uncertainty over the government's labor policy.

It was referring to an amendment to the Labor Standards Act, which would formally put in place a five-day work week but would cut the number of national holidays from 19 to 12, sparking opposition from labor unions. The amendment is still pending in the Legislative Yuan.

Such uncertainty, which has raised questions over Taiwan's investment environment and the government's competence in implementing its policies, has dampened investors' willingness to pour their money into the market, J.P. Morgan said.

In addition, reduced turnover in Taiwan's stock market has capped upswings in the prices of many stocks and pushed them into consolidation mode, also hurting investor sentiment, J.P. Morgan said.

In the survey, a figure above 100 indicates positive sentiment toward the investment environment, while a number below 100 indicates pessimism, according to the company.

In the latest quarterly poll, five of the six factors in the ICI fell, with the sub-index for the global economic outlook the only factor to post a gain, J.P. Morgan said.

The sub-indexes measuring sentiment toward Taiwan's capital market, Taiwan's economic outlook, possible gains resulting from investments over the next six months, and the prospects of Taiwan's stock market, were all down.

But the sub-index for sentiment over Taiwan's political situation and relations with China tumbled the most of any of the falling indicators.

J.P. Morgan said the improvement in the sub-index for the global economy showed Taiwanese investors remained upbeat about the global economic outlook even though the survey was conducted from Oct. 11 to 31 during the United States' presidential campaign.

Before the Nov. 8 vote, the possibility of Donald Trump winning the race had haunted global financial markets.

The survey found that 70.5 percent of respondents expected inflation in Taiwan to rise because of rising raw material prices in global markets.

Meanwhile, 49.8 percent of respondents said they profited from their overseas stock investments in the previous six months, up from 43.9 percent seen in the previous poll, while 42.4 percent said their investments in Taiwan's stock market showed gains, down from 43.2 percent in the previous survey.

The survey collected 1,069 valid questionnaires with a confidence level of 95 percent, and a margin of error of plus or minus 3 percentage points.

Source: Focus Taiwan News Channel