Confidence slips on sliding shares
Print Edition
CHINESE households’ confidence in the economy, investing and spending fell to a two-year low in July, mainly due to the recent stock market rout, according to a survey released yesterday.
The China Wealth Index, which is compiled every two months by the Bank of Communications and Nielsen, fell to 120 points in July, from 133 in May and 128 in March. The poll is based on the opinions of 1,888 households, with readings above 100 indicating optimism.
Lian Ping, chief economist at BoCom, said the data were collected during the two weeks starting July 8, which coincided with the stock market collapse and the loss of 1,500 points from the benchmark Shanghai Composite Index.
“The corrections in the stock market dealt a serious blow to people’s wealth,” he said.
“Many families had big losses, which shook their confidence in the economy and reduced their willingness to spend.”
A sub-index that measures people’s willingness to invest fell 8 points in July to 112, while one that rates confidence in the economy fell 6 points to 113.
Not surprisingly, the index that measures household income slumped 21 points from May to 132, as families counted the cost of their losing bets on the stock market.
The only bright spot in the month was the property sector, where government policies continued to stimulate sales. The index remained unchanged from May at 100 points.
“Some smart investors made money in the stock market boom and reinvested in the property market,” Lian said.
“But those who lost money might now have to cut their spending on big items, like houses, cars and holidays.”
China’s gross domestic product in the first six months rose 7 percent year on year, in line with the government’s full-year target. However, the expansion appeared to be on shaky foundations, as key activity indicators for trade and industrial profit slowed again in July.
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