A survey of Hong Kong traders has revealed broad optimism about future exports with a sustained period of moderate growth believed to be underway.
The HKTDC Export Confidence Index for the third quarter of 2024 showed that despite a decline compared to the second quarter, underlying sentiment remains broadly positive.
The Index is a quarterly survey of the views of more than 500 Hong Kong-based exporters from six major industry sectors.
Exporters’ views are reflected in two primary indices, one which gauges the Current Performance in the present quarter, while the other considers the Expectation for the upcoming quarter.
Each index comprises five subindices – (1) Sales and New Orders, (2) Trade Value, (3) Cost, (4) Procurement and (5) Inventory. A reading above 50 indicates an upward trend and an optimistic outlook.
Data collected from exporters during August 2024 shows that the Current Performance Index rose by 1 point to 52.6, indicating an improvement in export performance. This was underlined by a rise in 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.
Meanwhile, the Expectation Index fell 2.9 points to 51.4, indicating business sentiment remains broadly optimistic, albeit more subdued than the previous quarter. This decrease was driven mainly by the 8.5-point decline in the Trade Value Sub-Index (down to 51.7), with exporters expecting unit prices to increase only moderately after significant price increases in previous quarters.
The same traders, however, remained optimistic about the outlook for sales and new orders (54.6) and look set to continue to expand their procurement activities (55.4).
Overall, the findings suggest that the immediate future will be characterised by moderate, sustained export growth.
Exporters were surveyed on their expectations towards specific markets, which revealed that exporters have seen increased Sales and New Orders across all their key markets up to August.
Looking to the next quarter, respondents were most upbeat about the ASEAN bloc (59.7) and mainland China (58.4), but were negative about the US (48.5), EU (46.9) and Japan (46.7) markets.
By industry, exporters across all sectors reported an improvement in their export performance in the quarter, while clothing traders reported the most optimism for the next quarter, followed by toys and jewellery.
Costs remained the major drag on confidence with exporters nominating transport, labour and capital as their top cost concerns. While the indices for both current and future costs showed some improvement, scores remained at about 35, an indication that traders are still facing rising cost pressures.
Regarding the impact of recent trade restrictions and higher tariffs on certain China-origin exports, 60% of exporters reported no impact on their business to date, while 39% expect only a moderate downside.
On the sustainability front, fewer than 20% of respondents indicated they were familiar with the EU's Ecodesign for Sustainable Products Regulations (ESPR), which came into effect in July and is expected to have a broad impact across many sectors.
