Hong Kong exporters invest more as hopes rise for manufacturing rebound
Hong Kong exporters are much more confident about their prospects in the first quarter of 2014, driven by machinery product orders as manufacturers gear up for a rebound in demand, a quarterly survey by the Hong Kong Trade Development Council showed.
The export confidence survey of 500 exporters last month saw the index climb to 48.1 from 38.5 in the fourth quarter of 2013. The index is still below 50, which would indicate confidence in an expansion.
"It's an all-round improvement in the first quarter from the perspective of products and markets," said Nicholas Kwan, director of research of the trade council. The outlook for machinery rebounded to 52.1 from 39.9, underpinning the view that manufacturers are investing in anticipation of a recovery in the sector. Electronics and jewellery products had a reading of 48.4 and 48.5 respectively, versus the prior quarter's 39.7 and 38.
"Manufacturers are deploying more automation to replace labour as wages are on the rise," said Dickson Ho, principal economist for Asian and emerging markets at the council. The widened trading band of the yuan from 1 per cent to 2 per cent will boost exporters given the likelihood of a weaker currency, a Bank of America Merrill Lynch report said.
The survey showed that exporters believe the outlook for markets on the mainland and Japan will improve with a reading of 51.1 from below 47. "Abenomics has shored up consumer confidence in Japan," said Ho. But an increase in the sales tax from 5 to 8 per cent starting on May 1 could crimp Japan's retail sales. The reading for the United States and Europe rose to 48.9 and 48.1 respectively, against the preceding quarter's 45 and 41.2.
The survey did not provide an outlook for the Asean market but the export of consumer goods from Hong Kong to the region expanded 3 per cent year on year to US$6.66 billion last year, unchanged from the level of growth in 2012, but sharply down from the 17 per cent expansion in 2011.
Ho said increased local production and sourcing was a drag on exports to Asean, an example being Samsung's plan to add a mobile phone handset production line in northern Vietnam.