HK leads in business confidence index in GBA

However, the current performance index for business activity dropped to 50.6 from 54.1.

Hong Kong posted the highest business expectations within the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), according to a survey by Standard Chartered and the Hong Kong Trade Development Council.

The Standard Chartered GBA Business Confidence Index saw the expectation index increase for a second consecutive quarter, reaching 55.2, up from 54.8 in the second quarter, reflecting ongoing optimism amongst firms.

However, the current performance index for business activity dropped to 50.6 from 54.1, signalling a continued slowdown after a rocky first half of the year. Hong Kong’s own performance index showed a slight rise to 47.3 but remains under pressure.

The manufacturing sector has been particularly affected, with confidence dampened by concerns over potential trade tensions, especially the possibility of increased US tariffs on Chinese goods if Donald Trump wins the 2024 US presidential election. Nevertheless, the manufacturing expectations index held steady at 54.1, staying above the neutral mark.

Kelvin Lau, senior economist for Greater China at Standard Chartered, noted that the survey aligns with recent economic data showing a slowdown in industrial production and retail sales, largely due to weak domestic demand. However, China’s stimulus measures introduced in September and anticipated US Federal Reserve rate cuts may help lift business sentiment in the coming months.

Despite the positive outlook, 60% of GBA companies identified significant risks, particularly around global inflation, interest rates (47%), slower growth in China (46%), and trade barriers such as tariffs and sanctions (42%). Around 47.2% of respondents reported being affected by tariff hikes, whilst 44.2% saw impacts from sanctions, and 34.6% struggled with non-tariff barriers.

In response to potential trade disputes, 88% of companies involved in external trade planned to front-load export orders for the latter half of the year. Despite these concerns, 50% to 60% of companies do not expect significant negative impacts on their businesses moving forward.