Investor confidence grows after pandemic

Shanghai's consumer confidence retreated in the third quarter while investor confidence continued to grow strongly with the COVID–19 situation generally under control, according to a survey released on Tuesday.

The Shanghai University of Finance and Economics' quarterly Consumer Confidence in Shanghai Index fell by 6.2 points from the second quarter to 113.9 points for this year’s July-September period but stayed in positive territory.

The university's Index of Investor Confidence, meanwhile, jumped to 125.38 points, up 9.88 points from the previous quarter and 9.19 points higher than that the same period last year.

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

The dip in consumer confidence was mainly due to the current economic situation which is facing severe challenges both at home and abroad, with domestic economic growth slowing and a series of hidden dangers affecting economic development, said Xu Guoxiang, director of the university’s Applied Statistics Research Center.

A sub-index of purchase intentions dropped 19.5 points from the previous quarter to 86.6 points, but was 0.9 points higher than the same period last year, still at a relatively high level in the results of previous surveys.

The index of home-buying intentions retreated 7.6 points from the second quarter to 72.8 points, which was generally flat from the first quarter, while posting a year-on-year rise of 5.6 points.

Real estate market transactions have warmed up recently, leading to a decline in a willingness to buy houses, while in general, consumers still hold certain enthusiasm to buy houses, Xu said.

The intention to buy cars, meanwhile, tumbled by 26.9 points compared with the previous quarter and 2.9 points lower than the same period last year, while that for bulky durable goods also shrank by 24.2 points in July-September and was flat from a year earlier. The quarter-on-quarter declines in these two indicators were reasonable because of the sharp increase and high base in the previous quarter, according to Xu.

The surge in the investor index indicated a much more positive attitude, mainly due to achievements in prevention and control of the pandemic as well as steady recovery of the domestic economy, said Xu and Chang Ning, a professor at the university's school of statistics and management.

“At the same time, the domestic investment market and factor market have improved and the development space has been expanded, which further stabilize investor sentiment,” they said.

China has been encouraging financial institutions to enhance support for the real economy and reduce the cost of comprehensive financing, they noted. As a result, the operation and profitability of the real economy were improved, purchasing intentions strengthened, and entrepreneur sentiment was relatively optimistic.

Most of the sub-indexes measuring various aspects of investor confidence posted rises in the third quarter.