Taiwanese firms last month shed confidence about their prospects, dragged by uncertainty over the US presidential election and central bank credit controls to cool the housing market, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The sentiment gauge for local manufacturers stood at 94.82, down 1.73 points from a month earlier and receding for the fourth consecutive month, the Taipei-based think tank said.
Although the US Federal Reserve cut interest rates by 50 basis points, downstream manufacturers held to a conservative attitude on inventory replenishment in light of a drop in international oil prices, it said.
Photo: CNA
As a result, price competition from Chinese peers sharpened for local petrochemical product producers, it said, adding that demand from China and Europe has not improved yet, despite the introduction of stimulus measures.
The number of companies with a rosy view increased 7.9 percentage points to 28.2 percent, slightly lower than the number of firms with a negative outlook, which rose 6.2 percentage points to 28.8 percent, it said.
Mounting geopolitical tensions in the Middle East and the tight race in the US presidential election stirred unease over the economic situation ahead, it said.
A specter of trade protectionism looms large as former US president Donald Trump, the Republican presidential candidate, pledges to increase tariffs on all imports in a bid to keep manufacturing jobs in the US.
The business sentiment for service providers dropped 4.77 percentage points to 91.43, softening for the third straight month, TIER said.
The retreat took place after the summer vacation and stock investors largely had a cautious attitude amid uncertainty over the US presidential election, the institute said.
That explained why business at recreational facilities and securities houses weakened, it said.
The confidence reading for construction firms and real-estate brokers fell 6.22 percentage points to 101.21, as firms brace for a slowdown in the housing market after the central bank stiffened lending terms for mortgage applications across Taiwan.
The loan-to-value ratios for second, multiple and luxury homes were tightened nationwide as the monetary policymaker voiced concern over an overconcentration of real-estate lending and a potential housing bubble.
Unfavorable lending terms would weigh on the volume of presale projects and new construction, the institute said.
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