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Local consumer confidence nears record high in April

TAIPEI, Taiwan --Taiwan's Consumer Confidence Index (CCI) rose 2.77 points to 83.73 in April, according to a report released by the National Central University yesterday.

The score in April, which went up 6.44 points year-on-year, was close to the record high of 86.89 points. The score measures consumers' confidence for the next six months. A score of 100 or more represents optimism while anything below represents pessimism.

The rise may be attributed to strong performance in the stock market, exceptional export sales in the first quarter and the peaceful end to the anti-service trade pact demonstration, said Dachrahn Wu (吳大任), director of Taiwan Economic Development at National Central University.

The six sub-indexes of CCI — confidence in the stock market, price levels, job market, durable goods purchases, domestic economy and household finances — mostly rose in April.

Stock and Housing Markets

The stock purchase confidence index registered at 87 in April, up 8.6 points from the previous month, the highest increase among all indexes. Day Jaw-yang (戴肇洋), a division director at the Taiwan Research Institute (台灣綜合研究院), listed several reasons for the increase. First, the Financial Supervisory Commission has rolled out measures that favor investments in the stock market. Second, the government has been carrying out its policy of suppressing rising housing prices, which in turn has transferred investment capital from the real estate market into the stock market. Third, companies have reported higher-than-expected financial performances across the board, boosting market confidence.

The durable goods purchasing index, which in general represents real estate purchases, was pegged at 107.75, up 1.8 points from the previous month. The index has stayed above 100 points, representing optimism, for seven consecutive months.

With regards to Taipei's surging property prices, Dachrahn Wu pointed out that the government is very serious about suppressing rising prices, most notably by increasing property taxation.

Wu said that Taiwan's current taxation is relatively low compared with other nations, which has translated into lowering the "cost" of holding properties and, consequently, an investment-friendly environment. Also, many investors opted to hold properties and rented them out, contributing to low rental prices in Taiwan. As the government increases taxes, housing prices are likely to come down, while rents are likely to go up, Wu predicted.

Other Indexes

The April price level index was pegged at 45.65, unchanged from the previous month. The score is the lowest among all the indexes, as inflation remains a major concern. This phenomenon is universal across Hong Kong and mainland Chinaas well, pointed out Fu Jen University Department of Statistics Chairwoman Liang Te-hsin (梁德馨).

With the halt to construction of the Fourth Nuclear Power Plant, scholars pointed out that utility prices may rise as a result, contributing to higher prices in the future. Utility hikes will affect both households and industries. This is a long-term forecast, however, analysts said.

The job market index rose 1.25 points to 108.75, while the domestic economy index rose 3 points to 76.7, and household finances index rose 1.95 points to 76.5, the report showed.

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