HONG KONG - Hong Kong saw the first optimistic outlook in business activity expectations in nine months in the first quarter, yet remained an underperformer compared with its counterparts in the Guangdong‑Hong Kong‑Macao Greater Bay Area, a survey shows.
The city’s business index for “current performance” for the first three months of 2021 rose for the third consecutive quarter to 37.3, but the forward‑looking “expectations” index jumped to 50.7 from the previous quarter’s 38.3. The latter’s new result is the first time the index has landed in expansion territory since the index was launched in July, GBA Business Confidence Index (GBAI) subindexes show on Tuesday.
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
“Hong Kong is finally showing signs of improvement, even though it was still the worst performing city in the Bay Area,” said Kelvin Lau, senior economist at Standard Chartered Bank Greater China. Lau said the comeback in business sentiment was buoyed by the recovering global economic outlook, the city’s accelerating vaccine rollout program due to a wider vaccine-eligible group, as well as the relaxation of social distancing measures since February. “However, we expect this momentum to increase only more significantly in the second half of the year, as the headwinds of high unemployment are likely to persist in the months ahead,” he added.
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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. The GBAI comprises two main business indexes, one gauging “current performance” and the other looking at “expectations” with a reading of 50 being the neutral mark.
The GBAI’s “current performance” index for business activity rose further for the third quarter to 53 in the first three months in 2021 from 50.2 in last quarter, while the “expectations” index surged to 62.7, landing comfortably in expansion territory from 54.1 in the previous period. This reflects a booming business sentiment in the Bay Area, driven by the stronger economic recovery in the Chinese mainland, with a stronger manufacturing sector; the accelerated planetary inoculation campaign; and the upcoming new fiscal stimulus package in the US against the backdrop of global inflation environment, Lau said.
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Shenzhen and Guangzhou reclaimed their leading positions after being outperformed by smaller cities such as Dongguan and Foshan in the previous quarter. The comeback was due to the natural competitiveness that big cities have over their counterparts; a stronger recovery triggered by vaccine promotion; as well as a more robust rebound in the service sector, Lau said.
