SMEs pessimistic amid weak global economies

Updated: 2014-10-30 07:53

By Celia Chen in Hong Kong(HK Edition)

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Hong Kong's small and medium-size enterprises (SMEs) are still pessimistic about the city's business outlook amid weak performances in the global and mainland economies, as reflected in the latest Standard Chartered Hong Kong SME Leading Business Index.

For the fourth quarter of this year, the index slipped to 47.9, down 3.4 points from 51.3 in the previous quarter. It's the first time in a year the gauge has dropped below the 50 "no-change" mark and also its lowest in two years.

Sponsored by Standard Chartered Bank (Hong Kong) Ltd, the results of the quarterly survey, released on Wednesday, features an overall index comprising five sub-indexes.

In the "staff number" and "investment" areas, cautious optimism prevailed with the sub-indexes declining marginally at 51.5 and 52.2 - from 52.7 and 53.1, respectively - for the last quarter, but were still above the 50-point mark.

While the "sales amount" and "profit margin" areas reported significant drops to 49.5 and 41.5 - from 54.0 and 46.5 for the third quarter - the "global economic growth" area plunged the most to 38 points from 46.9.

"With recent reports of weak performances in the US, European and Chinese economies, and various international organizations lowering their economic growth forecasts, SMEs' pessimistic outlook for global economic growth is no surprise," said Gordon Lo, director of business management at the Hong Kong Productivity Council (HKPC).

"With the sub-index for 'global economic growth' falling to its lowest level in 18 months after having risen for two years, it simply shows that confidence in the global economy remains fragile. Also, the commencement of mass protests in Hong Kong has affected overall business sentiment," Lo added.

Kelvin Lau, a senior economist of Standard Chartered Hong Kong, said slower global economic growth will affect the index most. "Weakening sentiment among our survey respondents matches the recent rise in market volatility driven by worries over slowing global growth momentum and the end of the US Federal Reserve's quantitative easing. Local political uncertainty also appears to have had some negative psychological impact on sentiment," Lau added.

"I cannot predict to what extent the city's political troubles have impacted the index but, roughly, if we split up the survey, which commenced in late September and finished in early October, into two parts, the figures show that the index had fallen by 15 percent in the wake of the 'Occupy' protests, compared with the previous estimates," said Gary Cheng, a senior consultant with the HKPC's IT industry management unit.

SMEs pessimistic amid weak global economies

SMEs pessimistic amid weak global economies

(HK Edition 10/30/2014 page8)