Taipei: Consumer confidence in Taiwan weakened in July as consumer sentiment was affected by an almost 3,000-point drop in the local stock market during a single session earlier this month, according to a survey released by National Central University (NCU) on Monday. The consumer confidence index (CCI) fell by 0.47 points from the previous month to 64.58 in July, based on a survey conducted from July 18 to 21.
According to Focus Taiwan, all six constituent factors in the July CCI experienced declines, reflecting concerns over the next six months in areas such as consumer prices, the domestic economic climate, the stock market, durable goods purchases, employment prospects, and family finances. The subindex related to the stock market witnessed the most significant decline, dropping by 1.82 points from the previous month to 28.08. This decline followed the Taiex, the Taiwan Stock Exchange's benchmark index, plummeting by 2,953.71 points, or 6.47 percent, on July 17. The drop marked the steepest one-session decline in history, amid concerns about an AI bubble and escalating inflation in the United States due to tensions in the Middle East.
Dachrahn Wu, director of the NCU Research Center for Taiwan Economic Development, emphasized the impact of the Taiex plunge on investor confidence. Wu noted that Taiwan's economy, heavily supported by AI development, saw a corresponding rise in the Taiex over the past two years. As a result, the recent stock market downturn significantly impacted faith in the economy and consumer confidence.
Among other factors in the July CCI, subindexes for the domestic economic climate, family finances, employment, durable goods purchases, and consumer prices also declined by 0.34, 0.28, 0.27, 0.12, and 0.01 points, respectively, reaching 80.53, 77.42, 72.19, 93.43, and 35.82 in July.
Additionally, the home-buying index, compiled by NCU and Taiwan Realty, fell by 0.22 points month-on-month but remained above the 90-point threshold at 90.13. Wu suggested that increased volatility in the stock market might prompt some investors to redirect their funds toward the housing market. He noted that interest in home buying has shown some recovery signs since June, partly due to consumers rushing to enter the market before the expiration of the government's preferential residential housing mortgage program at the end of July.
The university's July CCI survey gathered 3,308 valid responses from Taiwanese consumers aged 20 and older, with a 95 percent confidence level and a margin of error of plus or minus 2.0 percentage points.