A themed tram with slogans celebrating the 25th anniversary of Hong Kong’s return to the motherland passes through the Central district. (ANDY CHONG / CHINA DAILY)
Business sentiment among Hong Kong’s small and medium-sized enterprises saw a record increase for the third quarter of 2022 after the biggest drop in the previous quarter, showing a steady recovery across industries from the fifth wave of the pandemic, according to a survey by the Hong Kong Productivity Council on Tuesday.
The Standard Chartered Hong Kong SME Leading Business Index increased 11.4 points from the second quarter to 47.1 in the third quarter, which indicated a strong increase in confidence in business conditions among local SMEs — although the overall outlook is still slightly pessimistic.
Optimism has returned after the Hong Kong Special Administrative Region’s government announced the gradual relaxation of social distancing measures in April and the implementation of the second phase of the Consumption Voucher Scheme.
Edmond Lai, The Hong Kong Productivity Council's chief digital officer
A reading above 50 indicates optimistic business sentiment among SMEs, while anything below 50 indicates a pessimistic outlook.
The poll, which was conducted in June and July, interviewed more than 900 SMEs covering manufacturing, import/export trade, wholesale, retail, accommodation and catering services, information and communications, finance and insurance, professional and business services, real estate, and construction industries.
“The index marked a double-digit rebound after the sharp fall in the previous quarter, indicating that Hong Kong SMEs have almost overcome the negative impacts brought by the fifth wave of the pandemic,” said Edmond Lai, HKPC chief digital officer.
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The survey results also showed that all five component subindexes rebounded simultaneously in this quarter, among which Investment Sentiment (51.1) and Recruitment Sentiment (50.5) returned to levels above the neutral level of 50. Business Conditions (up 19.1 to 46.0) and Profit Margins (up 18.3 to 43.6) recorded the most significant upturn and exceeded the level prior to the fifth wave of pandemic in the first quarter in 2022. However, Global Economy (up 13.7 to 37.5) remained relatively weak, failing to return to the 40 level.
“Optimism has returned after the Hong Kong Special Administrative Region’s government announced the gradual relaxation of social distancing measures in April and the implementation of the second phase of the Consumption Voucher Scheme,” Lai said. “Many SMEs became more active in their investment outlook this quarter, after a rather conservative cost-cutting approach in the last quarter.
People cross a road in Causeway Bay district in Hong Kong, Feb 21, 2022. (PHOTO / XINHUA)
Of the three major industry indexes, Retail, which was hit the hardest in the previous quarter, rebounded by 17.4 to 48.6 — the largest uptick among all industries. Manufacturing recovered by 13.2 to 46.8, while Import / Export Trade and Wholesale was the industry with the slowest recovery, up only 7.8 to 43.7 compared with the previous quarter
“Overall, the business sentiment of SMEs has largely returned to the level before the fifth wave of the pandemic, despite a relatively downbeat outlook for Global Economy.”
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All industry indexes saw an increase. Of the three major industry indexes, Retail, which was hit the hardest in the previous quarter, rebounded by 17.4 to 48.6 — the largest uptick among all industries. Manufacturing recovered by 13.2 to 46.8, while Import / Export Trade and Wholesale was the industry with the slowest recovery, up only 7.8 to 43.7 compared with the previous quarter.
Standard Chartered Bank (Hong Kong) Greater China Senior Economist Kevin Lau said the indexes indicated a clear economic improvement since Hong Kong started unwinding its social distancing measures as the fifth wave of the pandemic faded.
“This is particularly reflected in the immediate improvements in Business Conditions and Profit Margins — the two subindexes most indicative of short-term business performance and worst hit in the prior round of survey,” he added.
The survey showed that Business Conditions of all three major industries registered double-digit increases, with that of Retail climbing significantly by 32.1 to 51.7; that of Manufacturing increasing 20.0 to 45.0; and that of Import / Export Trade and Wholesale up 13.4 to 43.2. Moreover, the Investment Sentiment of the Manufacturing sector rebounded to 52.8, exceeding the level in the first quarter of 2022.
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In addition, Standard Chartered Bank (Hong Kong) gave a forecast of 0.2 percent GDP growth for the whole of 2022.