Hong Kong’s economy is continuing to gain ground, with a quarterly business survey pointing to improving confidence among the city’s small and medium-sized enterprises (SMEs), although respondents are calling for tax relief and government action to curb soaring rentals.
The Standard Chartered Hong Kong SME Leading Business stood at 49.5 for the first quarter of 2013, up 3.2 points, although it remains below the 50-level, which denotes no change.
The Hong Kong Productivity Council (HKPC) said the figure pointed to a brightening business outlook for local SMEs.
It said retailing was the most upbeat sector, with a retailing sub-index rising to 51.9, topping 50 for the first time. A figure above 50 indicates expectations of growth.
While sub-indices for manufacturing, and the import/export sectors remained below 50, although the outlook had improved.
“Manufacturing SMEs expressed rising confidence in sales and global economic growth as the level of inventory has dropped significantly in the last quarter,” Leo Lam, HKPC’s business innovation director said in a statement.
Lam said respondents expected new orders for stock replenishment would power demand, and retailers predicted that this year’s Lunar New Year holiday would be a boom for sales.
The investment sub-index rose to 54.9, up 3.6 points, indicating plans to increase investment, with respondents saying they planned to lift production capacity and raw materials inventory and to set up new offices, factories and retail outlets.
“The improvement in the SME Index matches the recent rise in market confidence that the global economic cycle is turning up,” said Kelvin Lau, senior economist at Standard Chartered Hong Kong.
“We believe better growth is indeed ahead of us, but not without risks, like the US debt ceiling and a still fragile European economy.
Lau predicted improving growth in 2013 although inflationary pressures would remain, and predicted that China’s economy would grow 7.85 per cent in 2013, with the yuan appreciating about two per cent against the US dollar over the same period.
The survey polled SMEs on what they expected from Chief Executive Leung Chun-ying inaugural policy address, finding that 25 per cent wanted tax relief, 20 per cent wanted more effective action to rein in the property market and rents, and 17 per cent wanted government to help them secure finance and loan guarantees.