Exporter confidence in Hong Kong sees further signs of improvement, said the Hong Kong Trade Development Council (HKTDC) recently.
The HKTDC Export Index increased a further 1.9 points to 32.8 in the third quarter of 2022, indicating a sustained improvement in the short-term exporter confidence in Hong Kong, the HKTDC noted.
However, exporters are facing downward pressure on prices, with the Trade Value Index falling 11.5 points to 40.2, the council added.
“Weakening demand in major markets dampened by high inflation and aggressive monetary tightening, coupled with rising Sino-US trade tensions and other fallouts from the Russia-Ukraine conflict, also cloud the export outlook,” HKTDC Director of Research Irina Fan pointed out.
The HKTDC conducts the Export Index survey every quarter, interviewing some 500 Hong Kong exporters from six major industries — machinery, electronics, jewellery, watches and clocks, toys and clothing — to gauge near-term exporter confidence in Hong Kong.
The Index indicates an optimistic or pessimistic outlook, with 50 as the dividing line.
Highlight: Shift in focus
- More than half of the respondents (52.0%) in the latest exporters’ survey view the shortened quarantine requirement in China – a seven-day centralised stay plus three days of home confinement – as positive for business.
- The top benefits of shortened quarantine requirement in China include enabling more flexible business travel arrangements (53.8%), the gradual resumption of cross-border commerce and trade (33.0%), and a smoother production flow (31.8%).
- Most respondents said COVID-19 persistence (40.2%) and border closure (22.6%) are the major impediments to export performance over the next three months.
- Hong Kong businesses tend to shift from being market-focused to more money-focused
- Developing other product categories (36.9%) and stabilising finances to ensure sufficient cash flow (35.6%) are the most popular business strategies adopted by respondents to deal with the changing business environment.
- More respondents said they intend to increase unit prices (35.2%, up 18 percentage points from the previous survey).
- Jewellery was currently the most promising sector with the highest sub-index at 44.2, followed by toys at 37.0. The jewellery sector also showed the largest improvement, with a 9.9-point increase from the previous quarter, while the electronics sector gained 2.3 points to 32.7.
- Asia continues to provide a relatively promising outlook, adding that Japan remains the best performer at 48.4 (up 0.8 points), followed by the Association of Southeast Asian Nations (ASEAN) bloc (46.9, up 3.6 points) and Mainland China (45.8, up 2.7 points).
Highlight: Recovering supply chains
- The pandemic impact on businesses tended to be less severe in the third quarter as compared with April-June.
- Fewer respondents experienced negative impacts on their business resulting from the pandemic (77.9%, down 1.2 percentage points).
- Among them, those whose business had been very negatively affected fell 11.8 percentage points to 23.4%.”
HKTDC Economist Corey To said rising transportation costs (64.1%) and logistics disruptions (51.8%) remained the key challenges for Hong Kong exporters, though both fell significantly – by 8.5 and 13.4 percentage points respectively – from the previous quarter, reflecting the gradual easing of supply chain issues.
“But it is worth noting that more respondents reported communications issues with overseas buyers/suppliers (48.2%, up 26.6 percentage points) and order cancellations (21.2%, up 4.5 percentage points),” he noted.