Hong Kong GBA confidence eases in Q1, still holds above neutral

The index fell from Q4 but stayed above 50 as financial services support growth outlook.

Hong Kong’s business confidence index readings for both current performance and expectations fell to 52.7 in the first quarter from the previous quarter, although both remained above the 50-point neutral mark, indicating growth.

The report showed a broad moderation in sentiment across the Greater Bay Area (GBA) compared to the prior quarter, according to the Standard Chartered Greater Bay Area Business Confidence Index (GBAI) released on 27 April with the Hong Kong Trade Development Council (HKTDC).

In Hong Kong, financial services recorded an improvement, whilst innovation and technology also strengthened. Manufacturing and trading contracted, while professional services eased.

Across other GBA cities, Shenzhen’s expectations rose to 50.1, supported by gains in financial services and innovation and technology.

Guangzhou fell below 50 due to a contraction in retail and wholesale. Foshan improved, Dongguan eased but remained in expansionary territory, whilst Macau and other GBA cities stayed in contraction.

By sector, financial services recorded the strongest current performance at 59.4, followed by professional services at 56.0 and retail and wholesale at 52.4. Manufacturing and trading remained below 50 at 49.2.

On expectations, financial services led at 60.9, retail and wholesale at 54.1, and professional services at 56.4, whilst manufacturing and trading stayed in contraction at 49.4.

Standard Chartered Global Research said the survey reflected business conditions amidst geopolitical and cost pressures.

In thematic findings, 38.4% of respondents cited loan interest subsidies for SMEs as the most supportive policy measure, followed by equipment upgrade subsidies at 36.9% and consumer goods trade-in subsidies at 31.7%.

The survey also found 54.9% of respondents identified labour costs as the main pressure point, followed by rental costs at 41.7% and market competition at 33.3%.