Skip to main content

Standard Chartered SME Index Edges up to 51.3 Global Economy Improving yet Investment Sentiment Remains Cautious

 
The “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the third quarter of 2014 has edged up 0.5 points to 51.3. Announcing the latest reading today (22 July 2014), the Hong Kong Productivity Council (HKPC) noted that an optimistic business outlook prevails as the Index stays above the 50 no-change mark for three consecutive quarters. SMEs’ confidence in the global economy continues to improve, reaching a record high; while investment sentiment has fallen for two consecutive quarters.  
 
Sponsored by Standard Chartered Bank (Hong Kong) Limited (Standard Chartered Hong Kong), the quarterly survey features an Overall Index comprising five Sub-Indices. In this quarter, the Sub-Indices for “Staff Number” (52.7), “Sales Amount” (54.0) and “Profit Margin” (46.5) rises 0.3, 2.0 and 2.3 points respectively, while the Sub-Index for “Global Economy” jumps 4.0 points to its record high of 46.9. The “Investments” Sub-Index, on the other hand, drops 3.5 points to 53.1, but the outlook remains positive. 
 
For sectorial findings, despite a drop in all three major Industry Sub-Indices, the readings are still better than those of the same period last year. Both Manufacturing and Retail industries are pessimistic about the business prospects for this quarter, with the former Sub-Index dropped 4.7 points to 47.1; while the latter even falls below 50 for the first time (at 47.7) since 2013 Q4, as a result of reducing investment confidence for the retail sector. Although the Import, Export & Wholesale Sub-Index has edged down 1.1 points to 50.4, its prevailing upward trend over the past two years points to a cautiously optimistic outlook. In anticipation of the release of new electronic gadgets that spur sales in this quarter, the Information and Communications industry is the most positive of all (jumps 6.7 points to 55.9). 
 
Mr Gordon Lo, Director (Business Management) of HKPC, said, “SMEs’ worries over the global economy are fading, but the decreasing investment confidence, especially in the Manufacturing, Retail, and Food & Accommodation sectors is note-worthy. Regarding operating costs, the ratio of rental expenses has increased from 23% to 32% over the past two years. Under the pressure of rising costs, SMEs should make use of information and communication technology, as well as other technologies to enhance operation and cost efficiency.”
 
This survey finds that the rental issue bothers SMEs most, with nearly one-third of respondents looking to support to ease the pressure on rental hike. On the other hand, with the unexpected depreciation of Renminbi in the first half of 2014, SMEs which import raw materials from the Mainland feel relieved. The percentage of SMEs who worry about increasing operating costs has reduced since then.  
 
This survey also gauged the views of SMEs on the impact of imposing a cap on the number of Mainland visitors under the Individual Visit Scheme. About 40% of respondents remarked that it may have negative impact to the local business environment.
 
Mr Kelvin Lau, Senior Economist, Standard Chartered Hong Kong, said, “The latest SME Index reading adds conviction to our belief that Hong Kong’s growth is beginning to stabilise in Q3 after going through a soft patch in Q2. In particular, the lift from improving global economic outlook is acknowledged by our survey respondents, and we expect this to continue in the coming quarters, mainly on the back of still accommodate policy conditions among major central banks around the world. That said, we are not expecting a strong economic rebound, judging by the drops among the three main industry sub-indices, only to be offset by improvements in other smaller segments in the economy. Indications of reducing cost pressure should be an encouraging short-term relief to HK SMEs. However, we expect RMB will resume mild appreciation in the second half.”
 
In this survey, HKPC has conducted telephone interviews with 819 SMEs in eight industry sectors during June 2014. 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 October 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 Chloe Chau at tel. (852) 2788 6158 or email: chloechau@hkpc.org. 
 
* * *
 
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.
 
* * *
 
Mr Jonathan Ho
General Manager
Corporate Communications
Tel: (852) 2788 6390
Fax: (852) 2788 5056
Email: jonathanho@hkpc.org
Website: www.hkpc.org
 
22 July 2014
 
 
Mr Gordon Lo, Director (Business Management) of HKPC (middle) announces the survey results of the
Mr Gordon Lo, Director (Business Management) of HKPC (middle) announces the survey results of the "Standard Chartered Hong Kong SME Leading Business Index" for the third quarter of 2014 with Mr Gary Cheng, Senior Consultant of HKPC (left); and Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong.