HKTDC / Standard Chartered Archives

GBA Business Confidence Index eases to the 50 neutral mark

Survey reveals recovery momentum intact

Standard Chartered and the Hong Kong Trade Development Council (HKTDC) today released the Standard Chartered GBA Business Confidence Index (GBAI) for the second quarter of this year. The current performance of “business confidence” eased to the 50 neutral mark while the expectations index remained in the expansionary territory (58.7), the second-highest reading in two years. The headline expectations index for credit also remained expansionary at 51.6, reflecting sanguine underlying growth expectations among companies in the region. Both expectations and credit indices point to further recovery in the third quarter.

Resilient investment appetite
The softer Q2 GBAI readings were expected considering the strong first-quarter GBAI performance brought by Mainland China’s swift post-COVID sentiment rebound. The performance of underlying sub-indices was more diverse this quarter after a more uniform increase in Q1. Fixed Asset Investment had the highest score of 52.9 among components, suggesting that respondents remained optimistic towards the longer-term GBA business outlook, by acknowledging the need to invest in capacity expansion in anticipation of further demand normalisation.

Industry sub-indices vary
The current performance index for Professional Services rose 4.0 points to an industry-best 56.1. The sector’s expectations index also outperformed by being the lone print above 60 (61.9). The current performance and expectations index of Financial Services and Innovation and Technology saw the largest quarter-to-quarter drops among sectors. Financial respondents’ sentiment was driven by margin pressures and credit worries amid an easing recovery momentum while the tech sector continues to face many headwinds, led by the ongoing global semiconductor downcycle.

China on modest recovery path
“The dip in the index in Q2 reflects the normalisation of base effects, softening of nationwide macro data quarter-to-date, and the novelty of reopening was bound to wear off. However, the index did not fall back into contractionary territory, suggesting only a softening of the recovery momentum. Given that GBA is a microcosm of Mainland China’s diverse economic drivers making it a bellwether for overall growth, we see the mainland managing to stay on a modest recovery path,” said Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered.

More diverse performance among GBA cities
There was a more diverse city performance among the current performance sub-indices. Most notably, Shenzhen (from 51.5 to 51.9) and Dongguan (from 53.5 to 56.4) showed their second consecutive improvement while other city sub-indices fell. Shenzhen weathered weaker responses from its tech respondents by posting the highest manufacturing and trading score among all city sub-indices. Guangzhou and Hong Kong, the other two GBA core cities, outperformed Shenzhen across the other four industry sub-indices.

Sustained recovery momentum in the coming quarters
Ms Irina Fan, Director of Research at the HKTDC, said: “We continue to take comfort from the fact that all city expectations indices stood comfortably in the 50+ expansionary territory, consistent with our view of a sustained recovery momentum in the coming quarters. That includes Hong Kong, which, despite returning to the lowest score of the pack, still managed to record a solid 54.7 expectations print (led by retail and professional services), making it two straight quarters of expansion.”

Overseas global supply chain migration yet to happen
Although there has been a lot of discussion about global supply chain shifts in the market, 91% of survey respondents said they have not moved any capacity overseas, and 87% reported no plans to do so for now. The survey found the biggest hurdles and concerns for relocating production capacity overseas are “cost of production higher than expected” topped the list at 34.6%, followed by “poor labour quality and productivity” at 29.9%, and “lack of good suppliers / proximity to suppliers” at 22.8%.

Related materials
– Standard Chartered GBA Business Confidence Index Report: https://www.sc.com/hk/gba/gba-index-report/
– HKTDC Research: https://research.hktdc.com/en/article/MTQxNzI2NzQ2MA

About Standard Chartered
We are a leading international banking group, with a presence in 57 of the world’s most dynamic markets and serving clients in a further 64. Our purpose is to drive commerce and prosperity through our unique diversity, and our heritage and values are expressed in our brand promise, here for good.

Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges.
The history of Standard Chartered in Hong Kong dates back to 1859. It is currently one of the Hong Kong SAR’s three note-issuing banks. Standard Chartered incorporated its Hong Kong business on 1 July 2004, and now operates as a licensed bank in Hong Kong under the name of Standard Chartered Bank (Hong Kong) Limited, a wholly owned subsidiary of Standard Chartered PLC.

For more stories and expert opinions please visit Insights at sc.com. Follow Standard Chartered on Twitter, LinkedIn and Facebook.

About HKTDC
The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong’s trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via trade publications, research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus. Follow us on Twitter @hktdc and LinkedIn

Media enquiries
Corporate Affairs Department
Standard Chartered Bank (Hong Kong) Limited
Sharon Cheung, Tel: +852 3843 0144, Email: Sharonps.cheung@sc.com

Communications & Public Affairs Dept
Hong Kong Trade Development Council
Sam Ho, Tel: +852 2584 4569, Email: sam.sy.ho@hktdc.org

GBA Business Confidence Index increment on record high

Resumption of normal travel boosts business confidence

Standard Chartered and the Hong Kong Trade Development Council (HKTDC) today released the GBA Business Confidence Index (GBAI) for the first quarter of 2023. The current performance for “business confidence” jumped 11.8 points to 51.3, which was also the first above-50 print since the fourth quarter of 2021. The expectations index leapt to 61.5, the 16.4 points jump was the biggest on record since GABI was launched in the second quarter of 2020. The better-than-expected GBAI reflected that companies in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) had regained confidence as normal travel between Hong Kong and Mainland China fully resumed.

Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered, and Ms Irina Fan, Director of Research, HKTDC, announced the latest “GBA Business Confidence Index” (GBAI) at a press conference today (17 April).

Sub-indices surge across board
Both the current performance and expectations sub-indices for business activity of all industries rose. Financial Services (59.8) and Innovation and Technology (54.3) topped current performance index; while Professional Services (65.2, up 19.1 points), Manufacturing and Trading (61.3, up 17 points) and Financial Services (67.4, up 16.9 points) showed the strongest improvements in expectations index.

Dongguan, Guangzhou and Shenzhen lead bulls
The current performance and expectations sub-indices rebounded for business activity in all GBA cities; Foshan (55.1), Dongguan (53.5) and Hong Kong (51.6) performed better for the time being, while the strongest growth in expectation index was registered in Dongguan (69.6, up 32.5 points), Guangzhou (67.7, up 24.6 points) and Shenzhen (60.8, up 13.7 points).

Sustained recovery expected
“As Mainland swiftly acquired herd immunity after the reopening early this year, economic activities have resumed speedily. This was reflected in the ‘business confidence’ level of companies operating in GBA rebounding significantly in the first quarter this year,” said Mr Kelvin Lau, Senior Economist, Greater China, Standard Chartered.

“With the support of government policies and boundary reopening, we see little reason to doubt the sustainability of the post-COVID recovery for now. As many GBA companies are still operating below pre-COVID levels, there appears plenty of room still for GBA businesses to play catch-up and return to trend,” he added.

Hong Kong sub-indices hit peak
Ms Irina Fan, Director of Research at the HKTDC, said: “The increase in current performance index was prompted by the sharp rise in new orders. It is also worth noting that the profit index (52.5) returns to expansionary territory, showing business improvement for those interviewed.”

“In addition, the two sub-indices for Hong Kong hit the highest level since GBAI was launched in the second quarter of 2020, reflecting that local companies are turning optimistic for the city’s outlook.”

Industrial production, services and fixed-asset investment growth all reaccelerated in the first two months of this year, she added. “The recent string of encouraging macro data explained the positive sentiments, confirming that China’s economy has turned the corner post-COVID.”

Back to normal by 2024
The GBAI is the first forward-looking quarterly survey in the market that looks at the business sentiment and synergistic effects in cities and industries across the GBA. It is compiled based on a survey of more than 1,000 companies in the GBA covering the manufacturing and trading, retail and wholesale, financial services, professional services and innovation and technology sectors. The index enables investors and businesses to better understand the current business climate, gauge future performance prospects and formulate their market strategies for the GBA.

Close to two-thirds (65%) of the interviewees said relaxation of mainland pandemic measures would positively impact their business for the rest of this year. More than half (53%) of the respondents said they had raised the business targets since the resumption of normal travel earlier this year. About 60% of them expected business – in terms of workforce, capacity utilisation, orders and sales – back to or exceeding the pre-COVID level in the fourth quarter.

Improved consumption on the mainland is expected but respondents remain concerned about rising raw-material costs, geopolitical tensions and intensifying competition within the industry. They hope expanding domestic demand, new GBA-specific policies, more attractions for foreign investments and more supports to the private sector will further improve the business operating environment.

Related materials
– Standard Chartered GBA Business Confidence Index Report: https://bit.ly/3A3GmKZ
– HKTDC Research: https://research.hktdc.com
– Photos download: https://bit.ly/3mynG2Y

About Standard Chartered
We are a leading international banking group, with a presence in 59 of the world’s most dynamic markets and serving clients in a further 64. Our purpose is to drive commerce and prosperity through our unique diversity, and our heritage and values are expressed in our brand promise, here for good.

Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges.
The history of Standard Chartered in Hong Kong dates back to 1859. It is currently one of the Hong Kong SAR’s three note-issuing banks. Standard Chartered incorporated its Hong Kong business on 1 July 2004, and now operates as a licensed bank in Hong Kong under the name of Standard Chartered Bank (Hong Kong) Limited, a wholly owned subsidiary of Standard Chartered PLC. For more stories and expert opinions please visit Insights at sc.com. Follow Standard Chartered on Twitter, LinkedIn and Facebook.

About HKTDC
The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong’s trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via trade publications, research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus. Follow us on Twitter @hktdc and LinkedIn.

Media enquiries
Corporate Affairs Department
Standard Chartered Bank (Hong Kong) Limited
Sharon Cheung
Tel: +852 3843 0144
Email: sharonps.cheung@sc.com

Communications & Public Affairs Dept
Hong Kong Trade Development Council
Beatrice Lam
Tel: +852 2584 4049
Email: beatrice.hy.lam@hktdc.org

Inaugural ‘Standard Chartered GBA Business Confidence Index’

First readings suggest a better Q3 on recovery from COVID-19 disruptions

Standard Chartered and Hong Kong Trade Development Council (“HKTDC”) released the inaugural “Standard Chartered GBA Business Confidence Index” (“GBAI”), the first forward-looking quarterly survey in the market that looks at the business sentiment and synergistic effects across cities and industries in the Guangdong-Hong Kong-Macao Greater Bay Area (“Greater Bay Area” or “GBA”). The index suggests that respondents expect an evident easing of contractionary pressure in Q3 after a challenging Q2 due to COVID-19 disruptions.

(from left) Kelvin Lau, Senior Economist, Greater China, Standard Chartered and Nicholas Kwan, Director of Research, HKTDC at the online press conference of “Standard Chartered GBA Business Confidence Index”.

According to the survey, the GBAI’s ‘current performance’ index for business activity stood at 37.0 for Q2-2020, below the neutral line of 50. This reflects the impact of a COVID-related global recession on the export-oriented region. However, the ‘expectations index’ stood at a much better 47.0, suggesting an expectation of a broad-based improvement in Q3 versus Q2. In particular, the ‘new orders’ sub-index stood above the neutral 50 mark, reflecting an optimistic view about the new orders in Q3. Although the GBAI current performance index for credit was at 45.3, the sub-components indicate lower borrowing costs from both banks and non-bank financial institutions as well as improvement in banks’ attitude towards lending.

Kelvin Lau, Senior Economist, Greater China, Standard Chartered said: “The survey result indicates that companies in the Greater Bay Area expect a better Q3, likely a reflection of the continued normalisation of activity within China, boosted by aggressive monetary and fiscal policy easing. This pick-up is driven by domestic more than external demand, matching the general perception that China is the first country to begin recovering from COVID-19.”

The GBAI also includes industry and city sub-indices – by industry, ‘innovation and technology’ is expected to improve the fastest, followed by ‘financial services’; by city, Guangzhou and Shenzhen are seen to lead the way in the post-COVID rebound, while Hong Kong is seen to lag. Among companies that plan to expand to other GBA cities, Shenzhen, Zhuhai and Hong Kong are the top preferred destinations.

“Shenzhen proved the most resilient in Q2 and is expected to return to economic expansion in Q3 along with Guangzhou. These cities’ encouraging performance may be because these finance- and technology-centred cities provide a base for larger companies with greater sustainability and more cash flow. For intra-GBA expansion, Shenzhen and Hong Kong are favourable because they are well-established core cities with high spending power, and Zhuhai is the closest city to Macau and well connected to Hong Kong via the Hong Kong-Zhuhai-Macau Bridge,” Mr Lau added.

The GBAI is compiled based on a quarterly survey conducted by the HKTDC in collaboration with Standard Chartered. Every quarter, at least 1,000 enterprises in key business sectors across the Greater Bay Area provide valuable feedback on a range of subjects, including their current business situation and credit conditions as well as their outlook on these subjects for the coming quarter. The survey also asks respondents thematic questions about what drives their business decisions and plans, and how this might shape the Greater Bay Area’s future.

Nicholas Kwan, Director of Research, HKTDC, said: “We are seeing strong policy support from the central government for turning the Greater Bay Area into a global business and innovation centre, by expediting infrastructure connectivity, building advanced manufacturing and modern services industries, and developing a high-quality ‘living circle’.”

“We expect demand for information on this region to continue to ramp up and the GBAI seeks to fulfil this need by offering timely and valuable insights into the region’s transformation, which will better equip businesses and policy makers for future planning,” Mr Kwan added.

To download the report of the “Standard Chartered GBA Business Confidence Index”, please visit the website: https://sc.com/hk/gba/gba-index/.

About Standard Chartered GBA Business Confidence Index

Standard Chartered GBA Business Confidence Index (GBAI) is the first forward-looking quarterly survey in the market that looks at the business sentiment and synergistic effects across cities and industries in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). In collaboration with the Hong Kong Trade Development Council, the GBAI is based on information drawn from quarterly surveys of over 1,000 companies operating in the GBA across different industries, including manufacturing and trading, retail and wholesale, financial services, professional services, and innovation and technology.

The GBAI offers a unique look at a range of subjects in the GBA, including current business situation and credit conditions, and outlooks for the coming quarter. It enables investors and businesses to better understand the current business climate, gauge future performance and formulate their market strategies in the GBA.

About Standard Chartered

We are a leading international banking group, with a presence in 59 of the world’s most dynamic markets, and serving clients in a further 85. Our purpose is to drive commerce and prosperity through our unique diversity, and our heritage and values are expressed in our brand promise, Here for good.

Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges as well as the Bombay and National Stock Exchanges in India.

The history of Standard Chartered in Hong Kong dates back to 1859. It is currently one of the Hong Kong SAR’s three note-issuing banks. Standard Chartered incorporated its Hong Kong business on 1 July 2004, and now operates as a licensed bank in Hong Kong under the name of Standard Chartered Bank (Hong Kong) Limited, a wholly owned subsidiary of Standard Chartered PLC.

For more stories and expert opinions please visit Insights at sc.com. Follow Standard Chartered on Twitter, LinkedIn and Facebook.

About HKTDC

The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong’s trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via trade publications, research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus.

Contact:

Standard Chartered Bank (Hong Kong) Limited
Gabriel Kwan / Daniel Ip
Tel: +852 2820 3036 / +852 2820 3871
Email: gabriel.kwan@sc.com / daniel.ip@sc.com

Hong Kong Trade Development Council
Beatrice Lam
Tel: +852 2584 4049
Email: Beatrice.hy.lam@hktdc.org