After being battered by the COVID-19 pandemic in the first half of this year, businesses in the Guangdong-Hong Kong-Macao Greater Bay Area are expected to come under less pressure with a recovery in the third quarter of 2020, a survey shows.
The Standard Chartered GBA Business Confidence Index’s “current performance” for business activity and “expectation index” readings stood at 27 and 47, respectively, in the second quarter, reflecting projections of broad-based improvement in the third quarter from the first three months of 2020.
“The survey shows that companies in the Bay Area expect a better third quarter, likely a reflection of the continued normalization of activity within China, boosted by aggressive monetary and fiscal policy easing,” said Kelvin Lau, senior economist of Greater China at Standard Chartered.
The “new orders” sub-index, in particular, stood above the neutral 50 mark, as companies surveyed are optimistic about new orders in the third quarter. Lau said the major growth in new orders is driven more by domestic rather than external demand, matching the general perception that China is the first country to begin recovering from the pandemic.
Among the 11-city cluster in the Bay Area, where enterprises plan to expand, Shenzhen, Zhuhai and Hong Kong are the top three preferred destinations. More than 70 percent of companies said the main reason for tapping into other cities in the region is to reach a broader market
Although US-China relations will continue to be tense ahead of the US presidential election in November, Lau said the surveyed companies expected the number of orders to gradually return to normal.
The GBAI’s “current performance” index for credit stood at 45.3, indicating lower borrowing costs from banks and non-bank financial institutions, as well as improvement in banks’ attitude towards lending.
Launched by Standard Chartered Bank and the Hong Kong Trade Development Council in June, the Standard Chartered GBA Business Confidence Index is the first quarterly survey on business sentiment and the synergistic effect across cities and industries in the Bay Area.
The index is computed from the analysis of more than 1,000 responses of Bay Area companies on their overall operations, business environment and expansion plans.
An index reading above 50 means that respondents are generally optimistic about the business environment, while a reading below 50 indicates predominantly pessimistic sentiment. A reading of 50 is neutral.
The survey also covered quarterly thematic issues. In the second quarter’s survey, companies were asked how the pandemic has affected their operations and what are their strategies in the Bay Area will be.
Among the 11-city cluster in the Bay Area, where enterprises plan to expand, Shenzhen, Zhuhai and Hong Kong are the top three preferred destinations. More than 70 percent of companies said the main reason for tapping into other cities in the region is to reach a broader market.
Lau said Shenzhen and Hong Kong are favored because they are well-established core cities with high spending power, while Zhuhai is nearest to Macao and well connected to Hong Kong via the Hong Kong-Zhuhai-Macau Bridge.
