GBA – Survey Says Expectations Tempered by Reality
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Pricing out a swift Q4 rebound
Our GBA Business Confidence Index (GBAI), based on quarterly surveys of over 1,000 companies operating in the Guangdong‑Hong Kong‑Macau Greater Bay Area (GBA) and conducted in collaboration with the Hong Kong Trade Development Council (HKTDC), shows that the current performance of ‘business confidence’ weakened for a fifth straight quarter in Q3, to 41.3 from 43.3 in Q2. This is the lowest print since the inaugural survey in Q2‑2020, reflecting a more challenging reality as both external (rising interest rates and recession risk) and domestic (COVID disruptions and weak housing market) headwinds worsened in recent months. This in turn prompted respondents to turn more cautious towards the Q4 outlook – the expectations index for business activity fell to 49.9 in Q3 from 52.5 in Q2. Though only a hair below the 50 neutral mark, this was still the first sub‑50 print in nine quarters, indicating little hope of a swift pick‑up in momentum.
That said, there were some bright spots. Our credit sub‑indices showed another quarter of an evident fall in borrowing costs in Q3 (although further improvements from here are not expected). This, together with outperformance of the financial services sector, suggests that the recent wave of (monetary and housing) policy easing has had a positive impact. Hong Kong has managed to stay on a continued recovery path, while other GBA cities continue to struggle – a testimony to the importance of orderly unwinding of COVID restrictions to lifting the GBA’s collective recovery ceiling. Responses to our thematic questions show that respondents have been most affected by COVID disruptions to transportation and logistics. We also asked about their views on the prospect of a reduction in US‑China trade tariffs, the impact of a real‑estate market downturn, and their exposure to and outlook across countries/regions.
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