Hong Kong exporters signalled an improved near-term outlook driven by optimism on the growth of electronics, timepieces, equipment/materials, clothing, toys and jewellery.
The Hong Kong Trade Development Council (HKTDC) said that for the first quarter of 2024 (January-March), the overall Expectation score was 47.4, which is close to the 50 benchmark (the dividing point between contractionary and expansionary trends) and indicates an improved near-term export outlook.
The report added 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."
"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," said Irina Fan, director of research at HKTDC, referring to the inaugural HKTDC Export Confidence Index.
"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," she added.
Optimistic prospects in Mainland China and the US
Among the other key findings, the HKTDC index said 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," it said.
Meanwhile, the report said 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.
The report found that 83.3% of respondents considered an economic slowdown or recession in their primary markets the biggest potential obstacle to export growth.
Putting the findings into perspective, Cherry Yeung, senior economist at the HKTDC, 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," she said.
"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," Yeung added.
"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," she further said.
The HKTDC released its inaugural HKTDC Export Confidence Index on March 27.
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.
HKTDC noted that it is 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).