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Standard Chartered SME Index for Q4 2016 at 42.5 Business Confidence Edges up with Less Worry to Wind up

The “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the fourth quarter of 2016 has increased 1.4, reaching 42.5. Releasing the findings today (10 November 2016), the Hong Kong Productivity Council (HKPC) noted that the business confidence of local SMEs is gradually picking up as the Index continues the growth momentum in last quarter, rebounding almost to the first quarter’s reading. The improved sentiment is echoed by the finding that fewer SMEs see the bleak future of winding up as compared to half a year ago.

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, “Staff Number” (50.3) is the only Sub-Index that has dropped, though mildly. Nevertheless, it still stands at the 50-no-change mark - an indication that despite a low recruitment intention, SMEs tend to maintain the current manpower level in this quarter. The Sub-Indices for “Investments” (46.4), “Sales Amount” (41.1), “Profit Margin” (38.3) and “Global Economic Growth” (24.6) all go up; among which the “Global Economic Growth” registers a notable increase of 8.6. However, these four Sub-Indices are still far below the 50 threshold, reflecting the prevailing bearish business outlook.

For sectorial findings, all the three major Industry Sub-Indices continue to stay below 50. With improving confidence towards “Sales Amount” during the Christmas peak season and easing worries over global economic uncertainties, both the Manufacturing (40.3) and Retail (40.5) Sub-Indices have rebounded above 40, with increments of 2.5 and 2.2 respectively. The Import, Export & Wholesale Sub-Index, however, fails to sustain the growth momentum in last quarter, and has edged down 1.0 to 36.7. The readings on “Staff Number” and “Investments” in this sector even hit the rock bottom since the launch of the Index.

Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong, said, “Overall we expect the global growth momentum to remain weak, especially among developed markets. There is no crisis, but still there are many risk events on the horizon, and there seems to be a general lack of urgency on the part of policy makers to take decisive action to boost growth. This could keep SMEs cautious and economic activities modest in Hong Kong. Yet not all is lost. At least Asia, led by China, will likely to continue to outperform. Persistent low interest rates among major central banks also mean that market sentiment, in particular towards emerging markets, will remain reasonably well supported. With China stabilising further and the Federal Reserve pretty much done with hiking rates, we do think that there will be more support for local retail spending and investment going forward, and that 2016 should be the cycle bottom.”

This survey continues to track the views of SMEs on the market and economic changes, and the implications on their business survival. 73% of the respondents agree that Hong Kong is facing an economic downturn, among which 14% may consider winding up their business within one year if the sluggish situation is here to stay. The sentiment has significantly improved as compared to that of half a year ago. The last survey found that 90% of the surveyed SMEs agreed that the economy was going down, and nearly 20% in this group might consider winding up within one year if the situation dragged on.

Mr Wilson Wong, Acting Director (Business Management) of HKPC, said, “Although the overall business sentiment, in particular in the Import & Export sector, has not improved much, the pressure weighing on SMEs to wind up has obviously lessened over the past six months. The change among retailers is obvious. Half a year ago, among those holding a gloomy view on the economy, nearly 30% of the retailers worried about closing down in a year, but now the figure has declined to 16%. This is also in line with the rebound of the Retail Sub-Index. Known for their quick response to challenges, local SMEs can leverage various Government funding and support schemes, as well as innovation and technology to create value-added products and services to ride out the adversity.”

Conducted from mid-September to early October 2016, this survey successfully interviewed 867 local SMEs. To download a report of the “Standard Chartered Hong Kong SME Leading Business Index”, please visit the website: www.smeone.org.

To help SMEs overcome challenges in business operation, HKPC and Standard Chartered Hong Kong today co-organized the SME Conference. In addition to analyzing the trends of the Index and market outlook for 2017, the event also explores the business strategies for SMEs amid market volatility. Opened by Mr Godfrey Leung, Under Secretary for Commerce and Economic Development of the HKSAR Government, the Conference also features Mr Willy Lin, Chairman of HKPC; Ms May Tan, CEO of Standard Chartered Bank (Hong Kong) Limited; and industry and business leaders.

For more details about the Index, please contact HKPC’s Kinson Leung at tel. (852) 2788 5795 or email: kinsonleung@hkpc.org. For other media enquiries, please contact Chloe Chau at tel. (852) 2788 6158 or email: chloechau@hkpc.org.

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Mr Jonathan Ho
General Manager
Corporate Communication and Marketing
Tel: (852) 2788 6390
Fax: (852) 2788 5056
Email: jonathanho@hkpc.org
Website: www.hkpc.org

10 November 2016

Mr Wilson Wong (left), Acting Director (Business Management) of HKPC and Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong, announce the survey results of the Mr Wilson Wong (left), Acting Director (Business Management) of HKPC and Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong, announce the survey results of the "Standard Chartered Hong Kong SME Leading Business Index" for the fourth quarter of 2016.