US-China trade war saps confidence among Hong Kong businesses
Sentiment among Hong Kong small to medium-sized businesses has dropped to its lowest levels since the first quarter of 2017, according to new survey
The trade war between the United States and China is beginning to weigh on business sentiment among small to medium-sized employers, with overall confidence for the fourth quarter at its lowest level since the beginning of last year, according to a new survey.
Sentiment for the final three months of the year dropped 6.7 points to 43.0 on a quarter-on-quarter basis, in the Standard Chartered Hong Kong SME Leading Business Index, with the largest drop in confidence in the import, export and wholesale area. Confidence had not dipped to that low of a level since the first quarter of 2017 when it hit 41.9, according to the index.
Nearly half of the businesses surveyed said they believed the trade tensions will last for more than one year, the Hong Kong Productivity Council and Standard Chartered said at a press conference on Thursday.
“We can now say with confidence that [small to-medium sized enterprises] SMEs are expecting genuine business deterioration in the foreseeable future, based on much weaker sales and profit margins,” Kelvin Lau, senior economist for Greater China at Standard Chartered, said.
“This is in line with our macro observations, where Sino-US trade outlook uncertainty has already exacerbated market volatility and weakened local confidence, even though real activities have largely remained resilient for now,” he said.
The survey was conducted in the second half of September and interviewed 823 SMEs in Hong Kong.
The decline in business sentiment comes as Standard Chartered and a number of major banks now expect lower growth in Hong Kong next year and have lowered their gross domestic product forecasts.