HONG KONG, Sept 24, 2024 – (ACN Newswire) – Hong Kong traders remain optimistic about their prospects with a sustained period of moderate growth believed to be underway. This was the key finding of the Hong Kong Trade Development Council (HKTDC) Export Confidence Index for the third quarter of 2024 as released today.
The Index – a quarterly review of the views and expectations of Hong Kong-based traders across a broad cross-section of industry sectors – showed that, despite a slight decline compared to the second quarter, underlying sentiment remains broadly positive. In another welcome outcome, the majority of the sub-indices remained in expansionary territory, a clear indication of widespread anticipation of continued growth.
Putting the overall findings into context, Irina Fan, Director of HKTDC Research, said: “Hong Kong exporters remain resilient, despite the uncertainty stemming from lingering trade tensions. Indeed, the majority of respondents reported no – or only minimal – impact from the recent round of trade restrictions and higher tariffs.”
Strong sales and new orders
Looking at the findings in greater detail, the overall Current Performance Index rose by 1 point to 52.6, a development seen as reflecting strong sales and new orders, rising unit prices and expanding procurement activities. This was underlined by concurrent rises in the relevant Sub-Indices – the Trade Value Sub-Index (56.2, +2.5) and Procurement Sub-Index (57.3, +3.3). Although the Sales & New Orders Sub-Index recorded a moderate 1.8-point drop, it stayed resolutely in expansionary territory at 55.7.
The Expectation Index also remained in expansionary territory at 51.4 even after a 2.9-point dip. This decrease was driven mainly by the 8.5-point decline in the Trade Value Expectation Sub-Index (down to 51.7), with traders expecting unit prices to increase only moderately.
The same traders, however, remained optimistic about the outlook for sales and new orders (with a Sales & New Orders Expectation Sub-Index reading of 54.6); and look set to continue to expand their procurement activities (Procurement Expectation Sub-Index: 55.4).
Overall, the findings suggest that the immediate future will be characterised by moderate, sustained export growth.
Cost pressures lessen, but remain major concern
It was also apparent that costs remained the major drag on exporter confidence in the third quarter. While both the Current and Expectation Cost Sub-Index showed some improvement, scores remained at about the 35 level, an indication that exporters are still facing strong cost pressures.
In terms of Current Performance, exporters have seen increased Sales and New Orders across all their key markets. With regard to outlook (Expectation), exporters were most upbeat about the ASEAN bloc (59.7) and mainland China (58.4).
By industry, the third quarter saw an improvement in Current Performance across all sectors. In terms of prospects for the near-term, Clothing exporters are the most optimistic at 61.2, followed by Toys (58.7) and Jewellery (56.4).
Looking to the immediate future, Nicholas Fu, Senior Economist with HKTDC Research, said: “Exporters from five out of the six key sectors expect the current positive business momentum to continue. Overall, Clothing exporters were the most upbeat, followed by those in the Toys and Jewellery sectors. While it is noteworthy that cost pressures are expected to stay high across all sectors, there is some possibility of a slight improvement further down the line.”
In addition to addressing the standard index criteria, the latest survey also focused on several specific thematic questions with regard to the primary challenges facing exporters and the favoured forward strategies of participants. Responses here showed that:
– High and rising costs (transport, labour, production and capital) were seen as the most significant challenges.
– In order to mitigate any related risks, Hong Kong exporters intend to adopt more cautionary business strategies.
– Regarding the impact of recent trade restrictions and higher tariffs on certain China-origin exports, 60% of respondents reported no impact on their business to date, while 39% expect only a moderate downside.
– On the sustainability front, however, fewer than 20% of respondents were familiar with the EU’s newly enacted Ecodesign for Sustainable Products Regulations (ESPR), which is expected to have a broad impact across many industry sectors.
Notes for Editors
The HKTDC Export Confidence Index was introduced in the first quarter of 2024. It is a composite of five sub-indices – Sales and New Orders, Trade Value, Cost, Procurement and Inventory – and seeks to provide a comprehensive overview of Hong Kong exporter sentiment.
There are two primary / overall indices, one of which gauges the Current Performance in the present quarter, while the other considers the Expectation for the upcoming quarter via a weighted average of the following five sub-indices:
– Sales and New Orders: This is an indication of overall export performance as well as the level of new export orders received by respondents. This index is compiled based on respondents’ feedback regarding the prospects of each of their major export markets.
– Trade Value: This focuses on tracking the movement of unit export prices.
– Cost: This tracks cost pressures as they relate to day-to-day operations, including raw material prices / labour and other operational costs/ financing requirements. Compared with the other indices, it is an inverted index, with an index reading above 50 indicating a downward trend for costs, while a reading below 50 indicates an upward trend for costs.
– Procurement: This is a measure of the input-buying activity of Hong Kong traders.
– Inventory: This tracks the overall inventory levels held by respondents for present use and the upcoming quarter. An index reading above 50 indicates a lower-than-normal inventory level, while a reading below 50 indicates a higher-than-normal inventory level.
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References
– HKTDC Research website: http://research.hktdc.com/
– HKTDC Export Confidence Index 3Q24: Sustained Optimism Underpinned by Strong Sales and New Orders https://research.hktdc.com/en/article/MTgwNDk1NTM5OQ
Photo download: https://bit.ly/4deCzLZ
HKTDC Director of Research Irina Fan (left) and Senior Economist Nicholas Fu (right) announced the HKTDC Export Confidence Index for the third quarter of 2024 at a press conference today |
HKTDC Director of Research Irina Fan |
HKTDC Senior Economist Nicholas Fu |
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About HKTDC
The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong’s trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus.
Topic: Press release summary
Source: HKTDC
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