Business expectations across the Guangdong-Hong Kong-Macao Greater Bay Area continued rising in the third quarter with Hong Kong performing the best of all 11 cities, according to a survey released on Monday by Standard Chartered Hong Kong and the Hong Kong Trade Development Council.
The survey revealed that the expectation index under the GBA Business Confidence Index (GBAI) for the third quarter of 2024 rose to 55.2 from 54.8 in Q2, recording an increase for two consecutive quarters.
“Although the improvement was too modest for comfort, we believe that the business sentiment among GBA companies can be boosted in the near term,” said Standard Chartered senior economist Kelvin Lau Kin-heng.
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“It is noteworthy that the optimism associated with China’s stronger-than-expected stimulus package introduced in late-September, together with the new phase of the US Federal Reserve’s rate cut cycle, has yet to reflect in the third-quarter survey findings.”
The current performance index under GBAI fell to 50.6 from 54.1 in Q2.
The survey, which interviewed over 1,000 companies across various sectors in the GBA, aims to gauge business sentiment and economic prospects in the region. While a GBAI above 50 suggests a positive outlook, a reading below 50 indicates that businesses remain wary of potential headwinds.
Hong Kong posted the highest expectation index, rising to 58.8 in Q3 from 49.7, the steepest rise among the GBA cities, and the city’s current performance index increased 0.2 points to 47.3. The report explained that the rising expectations of Fed rate cuts since late July may have supported sentiment.
By contrast, Shenzhen saw a drop to 50.4 in Q3 from 57.3 in its current performance index, despite enjoying a strong lift from stronger responses from the city’s innovation and technology companies. All other industry sub-indices in Shenzhen fell in Q3, led by an 8.8 point drop in manufacturing.
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The report said that the GBA manufacturers’ confidence may have been affected by a potential surge in US tariffs against China-origin products.
“About 60 percent of respondents express concerns that internal and external risks may substantially effect their overall business in the next 12 months, and the top three concerns were higher global inflation and interest rates, renewed China growth slowdown and trade tariffs, sanctions against China-origin products,” said Irina Fan Yuen-yee, director of research at the Hong Kong Trade Development Council.
“However, some 50 to 60 percent of the respondents do not anticipate any potential negative effects of tariff sanctions on their business,” Fan added.
Contact the writer at thor_wu@chinadailyhk.com
