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Household sentiment down in July due to stock rout
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SENTIMENT among Chinese households on China's economy, family investment and expenditure fell to a two-year low in July mainly due to the recent stock market rout, according to a survey released today.
The China Wealth Index, compiled by Bank of Communications and Nielsen every two months, landed at 120 in July. It was down from 133 in May and 128 in March, turning out to be the worst in more than two years.
A reading above 100 still reflects optimism among the 1,888 households being tracked.
Lian Ping, chief economist at BoCom, said the data were collected during the two weeks starting July 8, or the period seeing the debacle of China's stock market with the Shanghai Composite Index losing nearly 1,500 points.
"The corrections in the stock market dealt a serious blow to the wealth of Chinese households," said Lian. "Many families had heavy losses, which shook their confidence in the economy and reduced their willingness on spending."
The component indices showed Chinese households' willingness to invest cut 8 points to 112 in July, while their confidence in the economy lost 6 points to 113. Due to the losses in the stock market, the index measuring household income slowed to 132, a sharp retreat from 153 in May.
The only bright spot was the property sector where supportive policies released in March continued to encourage people's purchase of homes. The index measuring people's willingness to buy properties remained at 100 last month, the same as that in May and being the highest in a year.
"Some smart investors made money in the previous stock market boom, and now turned to the property market again," Lian said. "But those losing money may cut their spending on big expenditures, such as buying homes, cars and tours."
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