Over 92 percent of small and medium-sized enterprises in Hong Kong plan to maintain or increase their level of investment in the third quarter of 2025, according to the Standard Chartered Hong Kong SME Leading Business Index released by the Hong Kong Productivity Council on Tuesday.
However, the overall business index of Hong Kong dipped from 43.8 for the second quarter to 40.5 this quarter, reflecting global economic uncertainty.
SMEs exhibited waning confidence in this quarter’s sales figures, based on the most recent index. Subindices for business conditions declined 5 points to 36.6, and profit performance decreased 5 points to 34.1, indicating reduced confidence in quarterly turnover.
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The global economy subindex fell for the third consecutive quarter, accumulating a 15.6-point drop since the fourth quarter of 2024. Key pressures include ineffective US economic stimulus measures suppressing consumption and high-tariff policies disrupting global trade flows, elevating operational costs for SMEs, according to the HKPC.
Despite the challenges facing the global economy, the performance of Hong Kong’s SMEs showed resilience. Of the 11 industries tracked by the HKPC, construction rose 2.6 points to 42.3, accommodation and food services went up 1.7 points to 42.9, driven by landmark infrastructure completions like Kai Tak Sports Park. These projects attract international events and tourists, supporting tourism-led initiatives like themed tours that benefit the hospitality sector.
Notably, manufacturing investment intent surged 3.5 points to a seven-year high, with an increased R&D focus amid global trade friction, according to the HKPC. Professional and commercial services also improved, with recruitment intent rising 2.9 points and profit outlook up 1.2 points, signaling sustained demand for high-value services.
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According to the index, cost pressures eased marginally: Only 47 percent of SMEs in Hong Kong anticipate higher raw material costs, a five-quarter low, while salary increase expectations dipped 1 percentage point to 19 percent.
Investment remains robust, with 87 percent of SMEs surveyed saying they will maintain expenditure, while 5 percent surveyed saying they will expand investments, prioritizing digital transformation, machinery, and staff development.
Kelvin Lau, senior economist of Standard Chartered’s Greater China and North Asia research team, said at the news conference that despite a challenging business environment, Hong Kong’s GDP performed steadily in the second quarter. Business confidence remains cautious yet stable, reflecting a resilient spirit in the face of adversity, he added.
Exports in the second half of the year are expected to moderate compared to a surprisingly strong first half performance, Lau said. Hong Kong’s SMEs have shown continued adaptability, actively strengthening their operational foundations, he added.
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Karen Fung, chief marketing officer of the HKPC, said at the news conference that this quarter’s index reveals that local SMEs are grappling with market competition and rising costs. Over 80 percent of Hong Kong businesses planning expansion are prioritizing the Chinese mainland or other Asian regions as their first choice, yet they face pressing needs regarding local regulations and reliable partners, she added.
The HKPC is committed to supporting Hong Kong businesses in expanding into global markets, she said. Through The Cradle, a newly established outbound services center of the HKPC, the council has partnered with three national-level technology innovation hubs to provide one-stop market access, technical support, and professional services for all Hong Kong businesses going outside the city.
Contact the writer at mikegu@chinadailyhk.com
