Consumers' confidence remaining positive

Shanghai's consumer confidence retreated in the first quarter amid the COVID–19 pandemic but still remained in positive territory, according to a survey released on Wednesday.

The Shanghai University of Finance and Economics quarterly Consumer Confidence in Shanghai index dipped 2.7 points from last year’s fourth quarter to 117.3 points for this year’s January-March period.

The university's Index of Investor Confidence, meanwhile, rose to 114.03 points, 3.12 points higher than in the previous quarter.

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

The weaker consumer confidence in Shanghai’s economy was mainly attributed to COVID-19, said Xu Guoxiang, director of the university’s Applied Statistics Research Center.

To support prevention and control of the epidemic, the city has taken strict measures, asking people to comply with home quarantine and avoid public events, and calling a halt to the production and operation of most companies and factories in the city, which undoubtedly had a significant impact on economic development.

Nonetheless, the pandemic in now under control in China. Businesses have resumed operations in general and people are also gradually returning to normal life, which has bolstered consumer confidence, thus the downward adjustments in various indicators were all in a reasonable range, Xu said.

A sub-index of income evaluation slumped 12.6 points to 115.7 points, the lowest level since the third quarter in 2011.

However, the sub-index of purchase intentions picked up 3.3 points from the previous quarter to 93.8 points, which was also 3.8 points higher than the same period last year.

The index measuring home-buying intentions advanced 2.7 points from the fourth quarter last year to 72.2 points, but posted a year-on-year decline of 2.5 points.

The intention to buy cars jumped sharply to 100.4 points from 92.1 points in the previous quarter and compared with the 88.2 points a year earlier, while that for durable goods remained generally flat from October to December 2019 at 108.8 points, indicating consumers still hold an optimistic view of the domestic economy.

The rise in the investor index, meanwhile, indicated a more positive attitude, mainly due to support policies such as those on stabilizing investment and foreign trade and boosting consumption, said Xu and Chang Ning, a professor at the university's school of statistics and management.

"At the same time, the overall valuation of China's A share market is now in a relatively reasonable range with strong resilience. The increasing trend of overseas capital investing in A shares also reflects the confidence of domestic and foreign investors in the Chinese market. These positive factors lifted the confidence of investors as well," they added.