The Hong Kong Trade Development Council (HKTDC) released its inaugural HKTDC Export Confidence Index today.
An upgrade to the well-established HKTDC Export Index, the new quarterly HKTDC Export Confidence Index will provide a more nuanced and comprehensive overview of business sentiment among Hong Kong-based exporters.
Derived from a survey of more than 500 Hong Kong exporters, the Export Confidence Index comprises five sub-indices – Sales and New Orders, Trade Value, Cost, Procurement and Inventory. These findings are evaluated in terms of Current Performance (how they represent present market sentiment) and Expectation (a measure of exporter sentiment with regard to the coming quarter).
For the first quarter of 2024 (January-March), the overall Expectation score was 47.4. This figure is close to the 50 benchmark (the dividing point between contractionary and expansionary trends) indicating an improved near-term export outlook. It was also notable that the Expectation scores for all sub-indices comfortably exceeded the Current Performance reading of 39.6, which, again, suggests exporters are confident that better times lie ahead.
Commenting on the thinking behind the new index, HKTDC Director of Research Irina Fan said: “Multiple elements impact exporter confidence and we now have an evaluation system that allows us to factor them all in. This will ensure that our quarterly assessment of this key component of Hong Kong’s economy is more versatile, more relevant and more insightful than ever before.
“The success of this initiative to date has allowed us to confidently report a likely uptick in orders from Mainland China, as well as a gradual overall recovery in exports that looks set to be led by the electronics sector.”
Optimistic prospects in Mainland China and US
Among the other key findings, the Sales and New Orders sub-index highlighted rising confidence in export growth, with its 49.9 reading close enough to 50 to suggest a high likelihood of stabilisation.
On the market front, exporters are generally more optimistic with regard to Mainland China and the United States, with exporters anticipating resumed growth in mainland orders in the second quarter.
Of the six key export sectors, electronics enjoyed the most positive outlook, followed by timepieces, equipment/materials, clothing, toys and jewellery.
There are also signs of stronger procurement activity in the electronics, toys and equipment/materials sectors as the corresponding Expectation indices approach or exceed the 50 level.
Overseas markets to regain growth momentum
For survey respondents, economic risks remained the primary concern among the external market issues that could potentially impact exports over the next 12 months. For 83.3% of respondents, an economic slowdown/recession in their primary markets was considered the biggest potential obstacle to export growth.
Putting the findings into perspective, Cherry Yeung, the HKTDC Senior Economist with oversight of the new Index, said: “Despite such concerns, there are many positive takeaways from the Q1 survey. Some 70% of traders, for instance, are anticipating resumed growth in their core overseas markets, while 37.1% are expecting a rapid upturn in mainland market demand. Looking beyond that, 36.4% of respondents are confident that e-commerce will provide new impetus for many export businesses in the course of the coming year.
“It is also reassuring that 55.9% of exporters believe their future profitability will remain unchanged or actually improve, with 40.9% expecting their profit levels to stay stable and 15% seeing an upturn on the horizon.”
References
HKTDC Export Confidence Index: https://research.hktdc.com/en/article/MTY0Nzc3MTE3OQ
HKTDC Research website: https://research.hktdc.com/en/
Photo download: https://bit.ly/3xfpjHJ
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HKTDC Director of Research Ms Irina Fan (right) and Senior Economist Ms Cherry Yeung (left) announced the inaugural HKTDC Export Confidence Index for the first quarter of 2024 at a press conference today |
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HKTDC Director of Research Ms Irina Fan |
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HKTDC Senior Economist Ms Cherry Yeung |
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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. Follow us on Twitter @hktdc and LinkedIn
Topic: Press release summary