Chinese consumer confidence plunged to a new low in February after stabilization last month, dragged down by sharp stock market falls and the effect of the snowstorms, said a report by Xinhua Finance Ltd and eziData yesterday.
The China Consumer Confidence Index compiled by the two companies fell one point to 95.8 points in February, the lowest level in the history of the survey, which started in April last year when the benchmark value was set at 100.
But as the two major triggers of the index downturn were temporary factors, the report believes people's confidence will probably return next month.
"As neither the stock market falls nor the snowstorms are likely to continue in the long run, it is expected that the consumer confidence has reached its bottom in February. Should no emergencies occur in the short run, the confidence is likely to rebound in March," the report said.
China's stock market suffered a major correction late in January trading and also this month due to excess liquidity after a lock-up period for many companies' previously non-tradable shares expired. Also, plans of selling new shares in large quantities by Shanghai Pudong Development Bank Co and Ping An Insurance (Group) Co added pressure to the market.
The Shanghai Composite Index has been hovering around 4,300 this week and requires frequent incentives from the government to cushion the downfall.
"The sharp stock market falls after mid January caused significant losses to investment returns for consumers," said the report.
"However, consumer's expectations on the future of the stock market did not collapse in February. Instead, they rebounded slightly, suggesting average investors have sufficient confidence in the stock market for a rebound."
Sentiment among consumers dropped in Beijing, Shanghai and Guangzhou, with the biggest fall occurring in Guangzhou and the lowest index noted in Shanghai.
The survey was conducted in 1,541 telephone interviews this month by Xinhua Finance Ltd, a financial information and media service provider and the local China consumer data provider eziData.
(Shanghai Daily, February 28, 2008)