Hong Kong Trade Sector Looks to Greater China for Growth, Finds HSBC Survey

Almost half of Hong Kong’s small and mid-market businesses (SMEs and MMEs) that engage in export and import have identified Greater China as the most promising region for their business growth in the next three months, according to the HSBC Trade Confidence Index. Only 13% of Hong Kong respondents expect growth from western Europe (including the UK), while 8% look to North America (the US and Canada).

The HSBC Trade Confidence Index surveyed 2,100 trade-oriented SMEs and MMEs in seven markets about their three-month outlook on: trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange and government regulation on their businesses.

The index shows the UAE, India and mainland China respondents are the most confident on trade activity and growth while Hong Kong, Australia and Singapore firms are the most bearish. Hong Kong scored 93.1 points on the trade confidence index compared to the UAE at 115.2, India at 114.7 and mainland China at 111.8. Vietnam scored 108. Singapore and Australia were just below neutral, with respective scores of 99.9 and 96.6.

Lawrence Webb, HSBC global head for trade and supply chain, said: “It is not surprising that Hong Kong’s trade sector is the least optimistic among the markets we surveyed. Hong Kong is deeply entrenched in the global economy and therefore more strongly impacted by the slowdown in global trade and overall uncertainty. However, our survey reflects the opportunity that may end Hong Kong’s slump sooner than later – the link to Greater China. In the mainland, for example, the government’s stimulus measures are likely to drive renewed trade activity around commodities, raw materials and other goods and services that are required to support infrastructure projects and fuel domestic demand.”

Hong Kong respondents are the most bearish in their outlook on trade volumes, with 46% saying they expect volumes to decline in the next three months. In contrast, Vietnam and mainland China are relatively positive, with 54% and 42% of respondents respectively expecting trade volumes to increase.

Less than one-third of the respondents in Hong Kong said they will need more trade finance in the next three months. But more than half of the respondents in Vietnam
(57%) and India (53%) expect their trade finance needs to increase, in line with their bullish outlook on trade. When asked where they will go for financing, at least half of the respondents in Vietnam (57%), mainland China (54%), Hong Kong (50%), the UAE (49%), Australia (48%) and India (47%) said they expect their banks to meet their trade finance needs. In contrast, 41% of respondents in Singapore said they will rely on self-funding over bank financing.


Related reading