Sen­ti­ment to­ward stock mar­ket falls to 20-month low

The China Post - - LOCAL -

Re­sults of a sur­vey re­leased Thurs­day show that mar­ket sen­ti­ment to­ward the lo­cal eq­uity mar­ket fell to a new 20-month low as in­vestors here took cues from re­cent volatil­ity in lo­cal share prices.

In the sur­vey, Cathay Fi­nan­cial Hold­ing Co. ( ) said that 39.4 per­cent of the re­spon­dents said they ex­pect share prices in the lo­cal mar­ket to fall over the next six months, while 23.4 per­cent an­tic­i­pate that the stock in­dex will rise over that pe­riod.

The re­sults trans­late into an op­ti­mism in­dex to­ward the lo­cal eq­uity mar­ket of mi­nus 16 in June, down 0.1 from the in­dex recorded in May. The June fig­ure was the low­est level since Octo- ber 2013, when the in­dex stood at mi­nus 17.2.

Cathay Fi­nan­cial said that mar­ket sen­ti­ment has been haunted by heavy losses on the lo­cal bourse in re­cent ses­sions, while some new trad­ing mea­sures have also pre­vented many re­tail in­vestors from en­ter­ing the trad­ing floor be­fore they can fig­ure out the ef­fects.

Start­ing from June 1, the daily up­ward and down­ward share price fluc­tu­a­tion lim­its have been raised to 10 per­cent from 7 per­cent. Also from the be­gin­ning of June, the amount of eq­uity re­quired for in­vestors to main­tain their mar­gin trad­ing ac­counts — known as the col­lat­eral main­te­nance ra­tio — has also been hiked from 120 per­cent to 130 per­cent of the amount bor­rowed on mar­gin.

The weighted in­dex on the Tai­wan Stock Ex­change briefly breached the 10,000 point mark in late April on the back of strong for­eign in­sti­tu­tional buy­ing, but mo­men­tum has been fad­ing amid con­cerns over the global eco­nomic cli­mate and fears of an in­ter­est rate hike by the U.S. Fed­eral Re­serve.

Since late April, the weighted in­dex has fallen more than 7 per­cent to close at 9,218.37 points Thurs­day.

Ac­cord­ing to the sur­vey, 24 per­cent of the re­spon­dents said they are less will­ing to take risks in the eq­uity mar­ket, while 19.2 per­cent of them said they have a larger ap­petite for risk in stock- trad­ing.

Cathay Fi­nan­cial said that 24.8 per­cent of the re­spon­dents said they ex­pect the lo­cal econ­omy to im­prove over the next six months, while 32.4 per­cent of them think the eco­nomic cli­mate will worsen over the next six months.

The re­sults show that the econ­omy op­ti­mism in­dex for June fell to mi­nus 7.6 from 14.4 recorded in May, ac­cord­ing to Cathay Fi­nan­cial.

The fi­nan­cial hold­ing com­pany said that such cau­tion to­ward the lo­cal econ­omy came af­ter re­cent dis­ap­point­ing eco­nomic data. Among the poor eco­nomic re­ports, the eco­nomic com­pos­ite in­di­ca­tor for April flashed a blue light, in­di­cat­ing a re­ces­sion.

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