Taiwan's Consumer Confidence Index Reaches 18-Month High in November, Driven by Optimism in Stock Market and Rebounding Economy

Taiwan's consumer confidence index (CCI) reached its highest level in a year and a half in November, according to a survey conducted by National Central University (NCU) [363610e8]. The CCI rose 0.34 points from the previous month to 69.4, the highest since April 2022. The increase was driven by optimism towards the stock market, with the sub-index for the local stock market experiencing the largest increase among the six factors. The rise in consumer confidence is attributed to the strong rebound of the Taiwan stock market in November, as foreign institutional investors rebuilt their positions. This positive sentiment is also reflected in the performance of the Taiwan Weighted index, which opened the day in positive territory [363610e8] [1257b221].

However, concerns remain over weak global demand and the potential impact of a weakening US economy and China's slow recovery on Taiwan's exports and sales of electronics components. Taiwan's export-oriented economy still faces challenges, including high interest rates, inflation, and escalating trade tensions between the US and China. These factors need to be closely monitored to ensure sustainable economic growth [363610e8].

The survey conducted by NCU collected 2,986 valid questionnaires from consumers aged 20 and over. The increase in consumer confidence is a positive sign for Taiwan's economy, as it indicates optimism among consumers about employment prospects, family finances, consumer prices, the local economic climate, and the likelihood of purchasing durable goods over the next six months [363610e8] [1ebcdd5f].

The positive sentiment in the stock market can be attributed to the positive outlook of Taiwan Semiconductor Manufacturing Co. (TSMC) at its investor conference. TSMC expressed optimism about the fourth quarter and growing demand for its most advanced 3 nanometer process [2203b42e].

Business sentiment in Taiwan's export-oriented manufacturing sector improved for the sixth consecutive month in May, according to the Taiwan Institute of Economic Research (TIER) [0fec3954]. The composite index, which gauges business sentiment among local manufacturers, rose 1.07 points from the previous month to 99.73 in May. In the service sector, a similar composite index increased to 97.44, marking the third consecutive month of growth. The construction industry also saw growth in business sentiment, with the composite index rising to 110.05 [0fec3954]. Despite uncertainties in the global economy, economic fundamentals remain on an uptrend. Taiwan's exports rose 9% in the first five months of the year, driven by strong global demand for information and communications devices and high-end AI servers [0fec3954].

However, the recovery in other industries appears unstable. A survey conducted by TIER found that 24.5% of respondents in the manufacturing sector reported improved operations in May, while 18.3% reported deteriorated operations. Looking ahead, 28.2% of respondents expect their business to improve over the next six months, while 16.7% expect their operations to deteriorate. The electronics industry showed mixed sentiment, with firms with high-end processes remaining upbeat and those with mature processes being more cautious. The textile, steel, chemical, and metal industries are expected to be more conservative due to expected higher oil prices and freight rates [0fec3954].

TIER has forecasted Taiwan's GDP to grow 3.29% this year, and as long as domestic demand remains solid, there is no need to worry about local economic growth. Taiwan needs to attract more foreign visitors to further boost consumption. The central bank's sixth round of selective credit controls in the housing market is expected to cap the amount of home transactions to some extent, but home prices are expected to remain high [0fec3954].

Overall, the increase in Taiwan's consumer confidence index reflects the positive sentiment among consumers, driven by optimism in the stock market and the rebounding economy. However, challenges such as weak global demand and trade tensions still pose risks to Taiwan's export-oriented economy. It is important to closely monitor these factors to ensure sustainable economic growth [363610e8].