HONG KONG: The city's export confidence reached its six-quarter high in the third quarter of 2009, indicating that export trade expansion may be in the offing, the Hong Kong Trade Development Council said yesterday.

The council's export index, tracking quarterly changes in Hong Kong's export confidence, rose to 48.3 in the third quarter from 42.9 in the second quarter, which is also the third straight quarterly improvement.

Edward Leung, chief economist of the Hong Kong Trade Development Council, said the index shows some stabilization in Hong Kong exports, although a reading below 50 still represents more pessimists than optimists.

"The readings for all major markets struck higher in the third quarter, which suggests a sustained and across-the-board improvement in export confidence," Leung said in a press conference yesterday.

Export confidence in all major markets, including the US, Europe, Japan and the mainland, has improved in the third quarter, while the index for the mainland market has risen into the optimist zone, to a level of 51.2.

"Given the relatively prosperous economic outlook on the mainland, Hong Kong exporters are quite optimistic towards the mainland market," Leung said.

With the export environment improving, the trade development council also found that Hong Kong companies which source, produce or sell products across the border have laid down aggressive plans to expand their businesses, including improving product quality and developing new products.

"Almost half of the interviewed Hong Kong companies said they will explore or expedite domestic sales on the mainland," Leung said, adding "It will be worth paying more attention to the mainland market development."

The latest index also reveals that all the major export sectors in Hong Kong are recovering, among which the electronics industries and jewelry - the most pessimistic sector in the March report - are now the most optimistic towards the future export market.

"The index shows that the worst export period has already passed and that we are heading to the gleam of a bright future," Leung added.

However, he noted that the speed of recovery in local exports will be slow and volatile, while the sluggish employment rate and shaky consumer confidence in the overseas markets may take a toll on the pace of recovery.

In contrast to the positive index report results and despite the export improvement in the second half, the council expects local exports may decline into 12 percent negative growth in 2009.

"The buyers and retailers in the US still remain very cautious in the orders; their wait-and-see attitude may be a drag on the overall export performance in Hong Kong," Leung said.

(HK Edition 09/17/2009 page3)