April Consumer Confidence Hits New Low Due to Stock Market Falls, Long Term Business Outlook Keeps Rising

2008-04-30 11:03 1310

SHANGHAI, April 30 /Xinhua-PRNewswire/ -- Xinhua Finance eziData China Consumer Confidence Index (CCCI) was updated today, with the survey results showing that, under the pressure of unrelieved rising general prices and a fast falling stock market, Chinese consumer confidence failed to maintain the rebounding trend seen in the month before and fell again by 1.4 points in April to hit a new low of 94.9 since the survey started in April 2007. However, consumer confidence in the mid-long term business outlook was not affected and kept rising for the third consecutive month in a row. For more on Xinhua Finance eziData China Consumer Confidence Index, please refer to: .

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The recurrent steep falls in the stock market in April has had great impact on consumers, causing a 3-point drop in consumer confidence in current conditions, led by a large decline in sentiment on current personal finances. Future expectations also fell, yet only by a slight 0.5 point. It is worth noting that, despite of the negative factors seen in April, consumer confidence on business conditions five years from now did not fall. Instead, it rose a full three points to 150.9, which was the third month-on-month rise in a row, with the extent of rise increasing each time, indicating a growing optimism in China’s long term economy on the part of the consumers.

Under the support of the Xinhua Finance family, Xinhua Finance eziData China Consumer Confidence Index is produced monthly by eziData, a local provider of China consumer data, and in association with Dr. Richard Curtin. Dr. Curtin is Research Professor and Director of the Consumer Sentiment Surveys at the University of Michigan’s Institute of Social Research. The survey this month was conducted through 1,543 telephone interviews from April 1 to 17, 2008. April 2007 survey results are set as the benchmark value of 100. More on the survey methodology can be found in the accompanying section.

The constant falls in the stock market incurred great losses on the part of the investors, with consumers reporting an average of minus investment returns in the past twelve months. However, data also shows that the percentage of stock holders among all respondents, as well as the percentage of stocks they hold, kept stable, and their future expectations of the stock market did not collapse but remained stable as in the last few months. All this is suggesting that the hardest times for the stock market is about to be over. (The data collection of April survey was completed by April 17 before the positive news on lowered stamp tax was released.)

As to real estate, debates on whether the market has reached its right price range under the government control as well as the promotional campaigns by some major real estate developers in selling their houses have had certain impacts on consumers’ judgment on their house buying decisions. Quite a number of consumers believed that they should buy at this point when the house prices were getting lower. And as the hot season for real estate approaches, sentiment on house buying in one year’s time rose again in April after a rise in March, while sentiment on house selling kept the falling, pushing the overall consumer sentiment on real estate investment in April to reach a record high since the baseline survey in April 2007.

In terms of major cities, consumer sentiment in April rebounded in Shanghai, yet fell in both Beijing and Guangzhou, showing a contrary trend to that in March.

Sentiment among Beijing consumers went down 3.5 points to 95.2, with both current conditions and future expectations falling. The fall was mainly due to a sharp drop in current personal finances and one-year outlook on personal finances, especially the former. The other three components, however, remained basically unchanged.

Sentiment among Shanghai consumers rebounded 2.9 points in April to 94.1, a level close to that in January, ending the bad luck of being the lowest reading among the three major cities in the previous four months in a row. Current conditions fell further, yet future expectations rose by a full 6.1 points, with all three components rising, especially in the mid-long term business outlook.

Consumer sentiment in Guangzhou plunged a full 8 points in April to reach as low as 88.3. Both current conditions and future expectations fell sharply, with all five components of the confidence index falling and one-year business outlook hitting a new low in the city’s survey history.

Consumer Voices:

-- I believe in the betterment of the government policies. It is only

that some of the policies have not been well implemented. When they

are I believe we will have a better life.

-- Our salary increases are behind the CPI increases. We are receiving

less and spending more. Life today is not as good as it was yesterday.

Even the Premier was saying that this would be a hard year.

-- Today’s house prices are not affordable to the average people. Yet in

the years to come there won’t be as large demand for the real estate,

since there will be more houses and less rapidly growing population.

If the government really does its job to control the real estate

market they should be able to do it easily. Therefore, it’s still a

matter of government policies.

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Xinhua Finance eziData China Consumer Confidence Index is produced in association with Dr. Richard Curtin, Research Professor and Director of the Consumer Sentiment Surveys at the Institute of Social Research, University of Michigan. The index is based on a monthly survey of around 1,500 Chinese households via stratified random sampling in 50 representative cities across East, Middle and West China using the same methodology as is used by the University of Michigan. All data is collected via computer assisted telephone interviewing (CATI). Index of April 2007 survey is set as the benchmark (100).

Notes to editors:

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Source: Xinhua Finance