Companies in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) expect an evident easing of contractionary pressure in Q3 after a challenging Q2 due to pandemic disruptions, said HKTDC recently when announcing the inaugural “Standard Chartered GBA Business Confidence Index” (GBAI) .
The GBAI is compiled based on a quarterly survey conducted by the HKTDC in collaboration with Standard Chartered, said HKTDC, adding that at least 1,000 enterprises in key business sectors across the GBA provide feedback every quarter on various subjects such as their current business situation, credit conditions, and their outlook on these subjects for the coming quarter.
The GBAI’s ‘current performance’ index for business activity stood at 37.0 for Q2-2020, below the neutral line of 50.
“This reflects the impact of a pandemic-related global recession on the export-oriented region, HKTDC noted. “However, the ‘expectations index’ stood at a much better 47.0, suggesting an expectation of a broad-based improvement in Q3 versus Q2.”
In particular, the ‘new orders’ sub-index stood above the neutral 50 mark, reflecting an optimistic view about the new orders in Q3, HKTDC added.
Though the GBAI current performance index for credit was at 45.3, the sub-components indicate lower borrowing costs from both banks and non-bank financial institutions as well as improvement in banks’ attitude towards lending.
The survey result indicates that companies in the Greater Bay Area expect a better Q3, likely a reflection of the continued normalisation of activity within China, boosted by aggressive monetary and fiscal policy easing, Kelvin Lau, Senior Economist, Greater China, Standard Chartered pointed out.
“This pick-up is driven by domestic more than external demand, matching the general perception that China is the first country to begin recovering from the pandemic,” he added
Guangzhou, Shenzhen to lead in rebound
The GBAI also includes industry and city sub-indices - by industry, ‘innovation and technology’ is expected to improve the fastest, followed by ‘financial services’; by city, Guangzhou and Shenzhen are seen to lead the way in the post-pandemic rebound, while Hong Kong is seen to lag, HKTDC noted.
Among companies that plan to expand to other GBA cities, Shenzhen, Zhuhai and Hong Kong are the top preferred destinations, the organisation pointed out.
“Shenzhen proved the most resilient in Q2 and is expected to return to economic expansion in Q3 along with Guangzhou,” said Lau.