The business sentiment at large Hong Kong enterprises improved slightly in the second quarter amid the ongoing economic recovery. In particular, businesses in the finance and insurance sector had a more positive outlook.

According to the latest Results on Quarterly Business Tendency Survey released by the government’s Census and Statistics Department on Friday, 14 percent of respondents anticipate a better business situation in the second quarter, 1 percentage point higher than that in the first quarter and slightly surpassing the 12 percent of those who expect a worse business performance.

Among the 10 industries surveyed, the finance and insurance sector is the most optimistic, with 21 percent of respondents predicting a better business performance in the second quarter compared to the previous three-month period, and 2 percent predicting a worse performance

“While the complicated external environment will still affect business sentiment in the near term, continued growth of the local economy should provide support,” a government spokesperson said.

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Among the 10 industries surveyed, the finance and insurance sector is the most optimistic, with 21 percent of respondents predicting a better business performance in the second quarter compared to the previous three-month period, and 2 percent predicting a worse performance.

The widespread expectation that the US Federal Reserve will implement interest rate cuts in the second quarter or later this year has stimulated investor interest, providing a boost to the finance and insurance sector, said Alexa Chow, managing director of ACTS Consulting.  

But Chow pointed out that there’s a new perspective among industry insiders that the rate cuts may fall short of expectations in terms of their timing, frequency and strength, which could have implications for the performance of the finance and insurance industry in the future.

As for the retail and construction sectors, the survey found more respondents expect their business situation to be worse, compared with the number that expect it to be better.  

This can be partially attributed to the sluggish performance of the real estate and stock markets, which has dampened consumer sentiment, Chow said.

Moreover, the trend of residents heading to mainland cities for shopping, as well as traveling outside of Hong Kong during long holidays, has contributed to the challenges faced by the retail sector, the analyst added.  

The survey, conducted between March 2 and April 11 this year, involved executives from around 560 large-scale establishments across 10 industries, such as manufacturing, retail, as well as accommodation and food services

The construction industry has also been affected by the downturn in the real estate market. “Despite the government’s removal of the curbs, or ‘cooling measures’, on property purchases, its stimulus effect has been mainly seen in the primary market, but not the secondary housing market.”

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The survey, conducted between March 2 and April 11 this year, involved executives from around 560 large-scale establishments across 10 industries, such as manufacturing, retail, as well as accommodation and food services. In addition to the overall business performance, the survey also covered factors such as volume of business or output, employment, selling prices and service charges.

Respondents in most of the surveyed sectors expect their number of employees to increase on balance or to remain stable in the second quarter. The demand for manpower is particularly significant in the real estate, finance and insurance, and accommodation and food services sectors.

“Large enterprises’ appetite for hiring improved slightly as compared to three months ago,” a government spokesperson noted.

Contact the writer at irisli@chinadailyhk.com