• Sun
  • Dec 21, 2014
  • Updated: 1:26pm
BusinessEconomy
HONG KONG

Less pessimism as hopes grow for a rebound

Sentiment has improved although the small and medium business index is still under water

PUBLISHED : Thursday, 18 October, 2012, 12:00am
UPDATED : Thursday, 18 October, 2012, 4:47am

Business sentiment among Hong Kong's small- and medium-sized enterprises (SMEs) has improved this quarter from the third quarter but remains pessimistic, the Standard Chartered Hong Kong SME leading business index shows.

Growth in the city's gross domestic product will rebound significantly next year, Standard Chartered senior economist Kelvin Lau predicted.

The SME leading business index, compiled by the Hong Kong Productivity Council and sponsored by Standard Chartered, rose to 46.3 this quarter from 42.9 in the previous quarter. A reading below 50 indicates pessimism.

"I don't want to paint a rosy picture, but it's not as bad as the third quarter," Lau said. "It's a stabilisation in the fourth quarter, and we're not expecting further deterioration of Hong Kong's economy. There is a high chance of a considerable rebound of the overall economy, led by the domestic retail sector."

He forecast the city's GDP would grow 1.8 per cent this year and 3.8 per cent next year.

The improved business sentiment in this quarter was due to more optimistic, though mixed, data from the United States, Europe and China, Lau said.

He said a rebound was expected next year owing to the acceleration of infrastructure projects by Beijing and policy easing by the central banks of China, US and Europe.

Hong Kong's retail sub-index stood at 46.2 in the fourth quarter, up from 37.4 in the third quarter, the biggest increase among the sub-indices.

"The rebound gives more confidence that retail in Hong Kong is not going to significantly contract," Lau said. "Domestic demand in Hong Kong remains steady after the third quarter, especially benefiting from the low unemployment rate and the wealth effect from the property market."

Leo Lam, the council's business innovation director, said: "Respondents in this sector expect sales and profit margins will improve with the Christmas and year-end shopping season."

The sub-index for import/export/wholesale remains virtually unchanged this quarter from the third quarter at 45.6.

The Hong Kong Port Development Council said container throughput fell 2.4 per cent year on year last month, compared with 9.2 per cent in August.

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