Business optimism in the Guangdong-Hong Kong-Macau Greater Bay Area (GBA) edged downwards following Donald Trump’s re-election in the United States, according to the latest Standard Chartered GBA Business Confidence Index (GBAI) report.
Despite the dip, business expectation levels remained above the 50 neutral mark.
The latest GBAI survey, conducted in collaboration with the Hong Kong Trade Development Council (HKTDC), covered the last quarter of 2024.
The findings captured early market reactions to Mr. Trump’s return, but largely excluded recent policy changes in China.
“The recent policy shift to a modestly loose monetary stance, which was not captured in the quarter-four findings, may potentially lift the next quarter’s GBAI survey results,” noted Kelvin Lau, Standard Chartered’s Senior Economist for Greater China.
“Further stimulus measure may also prolong the policy tailwind in the coming quarters, providing the key to an eventual rebound in GBA business sentiment,” he added.
Firms remain cautious
The GBAI is based on a survey of more than 1,000 companies, covering the manufacturing and trading, retail and wholesale, financial services, professional services and innovation and technology sectors.
Overall, business sentiment remained soft in Q4, amid rising concerns over US-China trade tensions within the export-oriented GBA.
The GBAI’s index of current company performance stayed largely unchanged at 50.7 in Q4, versus 50.6 in Q3.
The index for business expectations slid down to 52.9, from 55.2 in the previous quarter.
Business expectations dropped in five of the major cities covered by the survey: Hong Kong, Guangzhou, Shenzhen, Foshan and Dongguan. Expectations in the Macau and other cities cluster, however, rose slightly.
The market outlook also weakened across the five industry categories measured by the GBAI.
Business expectations within the innovation and technology sector fell the most, followed by professional services and retail and wholesale.
This suggests a broader softening of sentiment within the GBA beyond the potential impact of US trade tariffs on manufacturers.
The signals on current performance by sector, however, were more mixed.
Current performance for the manufacturing sector rebounded slightly, from 49.5 in Q3 to 50.1 in Q4.
The retail and wholesale sector experienced the biggest decline in current performance over the same period, dropping 3.9 points to 51.9.
Pro-growth policies
In response to external uncertainties, policymakers in China have adopted a pro-growth approach to support the local economy.
One third of respondents in the GBAI survey saw some degree of positive impact on a 12-month outlook.
“Among the positive respondents, 62% and 47% said they would either significantly or marginally upgrade their sales and investment plans, respectively, in 2025,” said Irina Fan, HKTDC Director of Research.
The most positive businesses were generally in the innovation and technology, retail and wholesale and the financial services sectors, with 70-80% of positive respondents in these segments expecting to increase sales or investment in 2025.
When asked which policy measures would positively impact their business, almost 49% of respondents wanted more corporate tax concessions and subsidies.
The next most popular option was more initiatives to support SME financing, cited by 40% of respondents. This was followed by new measures to strengthen international trade, mentioned by 33%.
