Standard Chartered SME Index Heralds a Positive Start for 2014 Q1, Reading at 53.4

 

The Hong Kong Productivity Council (HKPC) today (9 January 2014) released the “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the first quarter of 2014, which reports an Overall Index at 53.4. This is the first time that the reading exceeds the 50 no-change mark – reflecting more and more local SMEs look to an optimistic future. Sub-Indices for the three major industries – manufacturing, export and import, and retail – also rise above 50 for the first time, which all point to a positive outlook.
 
Sponsored by Standard Chartered Bank (Hong Kong) Limited, the quarterly survey features an Overall Index comprising five Sub-Indices. In this quarter, all Sub-Indices, including “Staff Number”, “Investments”, “Sales Amount”, “Profit Margin” and “Global Economic Growth” continue to rise. The Sub-indices for “Global Economic Growth” (43.5) and “Profit Margin” (49.9) report the biggest increase, up 4.9 and 4.6 points respectively.
 
For Industry Sub-Indices, all three major industry sub-indices are above 50 for the first time. Manufacturing industry sub-index is the highest of all at 58.4, up 10.3 points. The Import/Export Trade and Wholesale industry (50.9) and Retail industry (53.2) indices also rise marginally by 1.5 and 0.2 points. The survey notes that other industries are equally positive, with Accommodation and Catering Services industry being the most optimistic at 58.8. An exception is the Real Estate industry (40.9) as the Government’s demand-side management measures for properties are in force.
 
Commenting the findings, Mr Gordon Lo, General Manager (IT & Business Management) of HKPC, said, “As the growth in traditional US and European markets is gaining momentum, manufacturing SMEs are the most optimistic as orders have picked up since December. Regarding operating costs, while hikes in direct materials cost and employee salary expense are generally expected, some respondents noted their improved bargaining power which helped shift the bulk of the cost increments to the buyers. Hence, rising costs have not significantly impaired their outlook on profit margin.”
 
Mr Jammy Chen, General Manager, SME Banking, Standard Chartered Hong Kong, commented, “The SME Index has gone up 10.5 points since its launch in 2012, which reflects a continuous improvement on SMEs’ confidence. There are four industry indices that have caught my eyes. Both Accommodation and Catering Services, and Manufacturing industries are positive on their outlook as the sub-indices have been above 50 or rising for three consecutive quarters. Also, thanks to the growth of tourist inflows, retail industry continues to be optimistic. In addition, the sub-index for import, export and wholesale industry exceeds 50.0 for the first time which can mainly be attributed to an improved global economy. However, SMEs should be more mindful of changes in external factors such as risks arising from the US withdrawal of quantitative easing measures, and the impact on profit margin by currency and interest rate fluctuations.”
 
Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong, said, “The strong performance of our latest SME index reading is a key source of comfort. Survey respondents, in particular the manufacturers, confirm our view that 2014 will be a year of better growth across regions with low inflation. We expect upbeat manufacturing orders to translate into better performance in the import and export sector in the coming quarters; and Hong Kong, being an open economy and trading hub, will benefit from stronger global growth. The jump in Accommodation and Catering Services Sub-Index also illustrates Hong Kong’s continued domestic resilience thanks to a tight labour market and sustained tourist inflows.”
 
Although a tight labour market can lead to strong domestic demand, many manufacturing and retail SMEs are worried that manpower shortage will hinder industry development in the long term. Existing local labour supply does not meet the industry demand for professional skilled talents and junior staff.
 
With the Government due to announce the Policy Address and Budget, 25% of the SMEs surveyed agreed that the Government has offered adequate support for them. Tax relief, waiving of business registration fees and the ‘Dedicated Fund on Branding, Upgrading and Domestic Sales’ are cited as the most helpful initiatives which should remain in the next financial year. 
 
In this survey, HKPC has conducted telephone interviews with 816 SMEs in eight industry sectors during December 2013. To download a report of the “Standard Chartered Hong Kong SME Leading Business Index”, please visit the website: www.smeone.org. Results of the next survey will be released in April 2014.
 
For more details about the Index, please contact HKPC’s Gary Cheng at tel. (852) 2788 6178 or email: garyc@hkpc.org. For other media enquiries, please contact Felix Chan at tel. (852) 2788 5036 or email: felixchan@hkpc.org.
 
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About “Standard Chartered Hong Kong SME Leading Business Index”
The “Standard Chartered Hong Kong SME Leading Business Index” is a forward-looking survey on local SMEs’ outlook on the overall business environment for the next quarter. For each quarterly survey, HKPC’s professional team interviews more than 800 local SMEs from the manufacturing, import/export trade and wholesale, retail, accommodation and catering services, information and communications, finance and insurance industry, professional services, and real estate industries. It covers SMEs’ outlook on their ‘sales amount’, ‘profit margin’, ‘investments’, ‘staff number’, and ‘global economic growth’ for the next quarter.
 
The Index is announced in January, April, July and October to provide a useful reference for the public and SMEs in making strategic decisions and resource allocation amid the changing business environment.
 
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Mr. Jonathan Ho
General Manager
Corporate Communications
Tel: (852) 2788 6390
Fax: (852) 2788 5056
Email: jonathanho@hkpc.org
Website: www.hkpc.org
 
9 January 2014

 

(From left to right): Mr Gary Cheng, Senior Consultant (IT and Business Management); Mr Gordon Lo, General Manager (IT and Business Management) of HKPC; Mr Jammy Chen, General Manager, SME Banking, and Mr Kelvin Lau, Senior Economist, of Standard Chartered (Hong Kong) Limited, announce the survey results of the “Standard Chartered Hong Kong SME Leading Business Index” for the first quarter of 2014.

 

(From left to right): Mr Gary Cheng, Senior Consultant (IT and Business Management); Mr Gordon Lo, General Manager (IT and Business Management) of HKPC; Mr Jammy Chen, General Manager, SME Banking, and Mr Kelvin Lau, Senior Economist, of Standard Chartered (Hong Kong) Limited, announce the survey results of the “Standard Chartered Hong Kong SME Leading Business Index” for the first quarter of 2014.

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