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Wednesday, September 17, 2014, 08:55

Major markets exporter confidence dips slightly

By Sophia Luo in Hong Kong

Enterprises are pessimistic about Hong Kong exports in the short term with exporter confidence in the major markets including the US, Japan and the mainland dropping slightly, Hong Kong Trade Development Council (HKTDC) Director of Research Nicholas Kwan said at a Tuesday press conference.

According to the latest HKTDC statistics, Hong Kong Export Index for the third quarter of 2014, which measures exporters’ confidence, declined 5.9 points from the previous quarter to 41.4, tailing off below the 50-point mark that demarcates an expansion in activity from a contraction.

Except for clothing, export indices for all major industries fell in the third quarter of this year. The weakening sentiment in toys and electronics exporters was relatively milder, with Index ratings of 42.6 and 42, respectively.

HKTDC’s Principal Economist (Global Research) Daniel Poon  said, “The edging down of the Trade Value Index in the third quarter of 2014 to 50.9 is the second consecutive quarterly decrease, which indicates that traders in Hong Kong believe that prices will continue to increase, but that the room for such a rise has narrowed further.”

Moreover, in this latest quarter, the Procurement Index has dipped below the 50-mark, reflecting that procurement sentiment has turned negative except for clothing and toys whose indices are still above the 50-point mark.

Early on Aug 15, the government released the Half-yearly Economic Report 2014, expecting an improving mainland economy should entail a somewhat brighter export outlook for Hong Kong in the period ahead.

Total exports of goods staged a modest pick-up in the second quarter while exports of services slackened visibly to a 2.3 percent year-on-year decline in real terms, the first decline since the second quarter of 2009.

However, due to a cooled foreign and domestic demand and a decline in new export orders, growth in the mainland’s large factory sector slipped to a three-month low in August, raising concerns that the economy is faltering after a bounce.

The HSBC China Purchasing Managers’ Index (PMI), which closely gauges activity of the mainland’s manufacturing sector, retreated to 51.7 and 50.2 respectively last month, only a shade above the 50-point mark.

Despite fears that the mainland economic growth will slow down, the mainland’s external investment continues to grow as mainland enterprises are increasingly encouraged to go through Hong Kong to invest overseas, according to the HKTDC.

According to the latest figures from the United Nations Conference on Trade and Development (UNCTAD), the mainland’s outward direct investment (ODI) increased by about 15 percent to $101 billion, accounting for about 7 percent of the world total.

In August, the mainland’s ODI more than doubled year-on-year to $12.62 billion.

Even though Hong Kong makes up 60 percent of the mainland’s ODI, Kwan believed the country’s growing ODI will boost Hong Kong’s service sector thanks to the strategy of “going out”.

“Enterprises in Pearl River Delta (PRD) and Yangtze River Delta (YRD) are anxious to seek professional support from Hong Kong and overseas in product development and design, branding and promotion strategies, as well as professional services including finance, legal and accounting services,” said HKTDC economist Wing Chu. “In particular, Hong Kong is the preferred location for enterprises in both areas to seek support services and business partners.”

“With the mainland, particularly the PRD and YRD enterprises stepping up the tempo of ‘going out’ and ‘bringing in’, Hong Kong services enterprises will see many more opportunities,” said Chu.


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