A rainbow appears in the air over the city of Guangzhou, South China's Guangdong province, Oct 3, 2016. (PHOTO / VCG VIA CHINADAILY.COM.CN)
The Standard Chartered GBA Business Confidence Index rose for the fifth consecutive quarter in the second quarter of 2021, reflecting a buoyant business sentiment in the Guangdong-Hong Kong-Macao Greater Bay Area backed by a steady economic rebound, according to a survey released on Monday.
The current performance index for the second quarter stood at 58.7, safely above the neutral line of 50, compared with 53 in the first quarter, indicating a strong consensus on the robust economic activity in the Bay Area.
The current performance index for the second quarter stood at 58.7, safely above the neutral line of 50, compared with 53 in the first quarter, indicating a strong consensus on the robust economic activity within the Bay Area
The expectations index retreated to 59.3 from 62.7 in the previous quarter due to concerns among the manufacturers about the rising costs of raw materials, said Nicholas Kwan Ka-ming, the Hong Kong Trade Development Council’s director of research.
However, the expectations index from last quarter “was above the neutral line of 50, so it doesn’t indicate a pessimistic outlook,” he added.
The Greater Bay Area Business Confidence Index gauges business confidence based on quarterly surveys of over 1,000 companies operating in the Bay Area conducted by the Hong Kong Trade Development Council in collaboration with Standard Chartered.
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The index comprises two main business indexes — one gauging “current performance” and the other looking at “expectations”. A reading of 50 is considered neutral, with optimism and pessimism reflected in scores above and below 50, respectively.
Looking ahead, Kwan said he expected the index to continue to rise in the coming quarters, but at a more modest rate. “The gains in the current performance index are likely to be subdued,” he said.
Kelvin Lau Kin-hang, senior economist at Standard Chartered Hong Kong, said the “rise in the index will be slower” in the second half of the year but it will still be above the neutral mark of 50.
Lau said he expected Hong Kong's economy to grow by 8 percent in the second quarter, mainly due to the low base from the same period last year and the anticipated strong exports.
Hong Kong’s business index for “current performance” advanced to 45.1 from 37.3 in the first quarter, yet remained an underperformer compared to its counterparts in the Bay Area.
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“Hong Kong’s seeing improvement,” Kwan said. “It’s currently lagging behind other cities (in the Greater Bay Area), but it’s understandable,” he added, explaining that the pandemic is the pivotal factor in the city’s rebound. He said he expects the index to jump into expansion territory at 50.8 in the next quarter.
Lau attributed Hong Kong’s underperformance in the index compared to other cities in the Greater Bay Area to its externally oriented economy, with its specialties lying in finance and professional services instead of manufacturing, which has been one of the major beneficiaries of the recent global economic recovery.
“The reverse will not happen so fast,” Lau said, adding that the comeback in finance and professional services will take place only after the normalization of global cross-border flows.
“But it doesn’t mean that Hong Kong is no longer popular. In fact, many companies are planning to enter the city, mainly in finance, professional services and science and technology sector,” he added.
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“Professional services, finance and high level of internationalization are Hong Kong’s advantages. But in times of the pandemic, advantages can turn into disadvantages,” Kwan said. “However, if controlled well, those can be advantages again.”
xinlanzeng@chinadailyhk.com