Confidence of consumers, investors weakens

Shanghai’s consumer and investor confidence retreated in the second quarter though it remained in positive territory, according to a survey released on Thursday.

The latest Shanghai University of Finance and Economics quarterly Consumer Confidence in Shanghai index fell 6 points from the first quarter to 118.4 points for the April-June period. 

The university's Index of Investor Confidence, meanwhile, dropped to 106.61 points, 6.51 points lower than the first quarter. 

For both indexes, a reading above 100 shows optimism, below indicates pessimism.

The weaker consumer confidence in Shanghai’s economy was attributed to the US-China trade war and the tenser and more complex international economic situation, said Xu Guoxiang, director of the university’s Applied Statistics Research Center.

But Shanghai's economy has remained stable, keeping consumer confidence at a high level for the quarter, Xu added.

A sub-index of purchase intentions slumped by 8.5 points from the previous quarter to 82 points.

The component index measuring home-buying intentions dipped 5.3 points from the first quarter to 69.4 points, but posted a year-on-year rise of 5.4 points to be the third highest since the survey was launched, indicating that consumers are still satisfied with the current situation in Shanghai's real estate market, and the retreat was just a correction from last quarter's high, Xu said.

The intention to buy cars fell to 81.9 points from 88.2 points in the previous quarter and was down 5.3 points from a year earlier, while that for large household durable goods fell 13.9 points from January-March to 94.7 points, down 6 points from the same period of last year.

A decline in the investor index was mainly due to the trade tension between China and the US in the second quarter, which has had a large impact on China's economic growth and export environment, and has also raised worries of a global recession and increased risk in investment markets, said Xu and Chang Ning, a professor at the university's school of statistics and management.

Global trade protectionism and other issues has recently created a number of uncertainties that have to some extent affected the expected outlook for the real economy. At the same time, value added industrial output and industrial profits fell in the second quarter, leading to cooler manufacturing investment, dragging down entrepreneurs' market expectations, Xi and Chang pointed out.

"However, the release of policies such as reducing taxes and fees, stabilizing leverage, and financial supply-side reform has to some extent boosted investor confidence in improving domestic demand, the virtuous circle of the real economy and the value of the investment market," they said.