|In this Aug 20, 2013 photo, pedestrians walk past retail shops in Hong Kong. According to the Standard Chartered Hong Kong SME Leading Business Index for Q2 of this year, business confidence among small and medium-sized enterprises (SMEs) in Hong Kong has picked up amid a clearer outlook in global markets. (Philippe Lopez / AFP)|
HONG KONG – Business confidence among small and medium-sized enterprises (SMEs) in Hong Kong has picked up amid a clearer outlook in global markets, according to the Standard Chartered Hong Kong SME Leading Business Index for the second quarter of this year.
A stabilizing Chinese mainland and a still-strong United States economy were the major drivers behind local SMEs’ upbeat sentimentKelvin Lau, Economist, Standard Chartered Hong Kong
The Q2 index grew by a significant 3.7 points to 45.6 from the first quarter.
The forward-looking quarterly survey conducted by the Hong Kong Productivity Council and sponsored by Standard Chartered Hong Kong looked into five sub-indices of SMEs including staff numbers, investments, turnover, profit margin and global economic growth.
An index above 50 indicates optimistic sentiment, a number below shows pessimism while a reading at 50 represents neutral sentiment.
The Q2 index, using data from more than 800 SMEs, was still below 50 but recorded the highest reading since the third quarter of 2015.
Most of the improvement came from a 50 percent increase in the “global economic growth” sub-index.
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Kelvin Lau, senior economist of Standard Chartered Hong Kong, said that a stabilizing Chinese mainland and a still-strong United States economy were the major drivers behind local SMEs’ upbeat sentiment.
Mainland first-quarter GDP growth hit 6.9 percent, the strongest in six quarters, the official Purchasing Managers’ Index (PMI) also rose to 51.8 last month, an almost five-year high, while Conference Board Consumer Confidence Index in the US was at its highest since December 2000.
Lau thinks the strong performance was good enough for both the countries’ central banks to raise their interest rates recently.
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He is not too worried about increase of rates in the mainland, saying the effect of prudent monetary policy would be offset by the government’s pledge of a proactive fiscal policy.
Lau forecast mainland GDP growth in the second half of this year would linger between 6.5 percent and 6.9 percent and have a positive effect on Hong Kong’s SMEs. Lau said that sentiment would continue to improve in future but external uncertainties might cap the extent of Hong Kong’s economic rebound.