5percent SMEs in Hong Kong may close down in 3 months: survey

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http://www.nationmultimedia.com/aec/5percent-SMEs-in-Hong-Kong-may-close-down-in-3-mon-30284825.html

Oswald Chan
China Daily
HOME AEC AEC NEWS THU, 28 APR, 2016 1:00 AM

Hong Kong HONG KONG – A survey showed Hong Kong’s small and medium-sized enterprises’ (SME) business confidence fell to the lowest level in nearly four years, and 5.1 per cent of the interviewed stakeholders reckoned they may even close down within the next three months if the sluggish economic conditions persist.

The Standard Chartered Hong Kong SME Leading Business Index survey for the second quarter of 2016 reported its overall index fell to 40.4, the lowest reading since the first survey result was published in the third quarter of 2012.

The sub-indices of the manufacturing (39.8) and import, export and wholesale industries (34.5) dropped below the level of 40 for the first time, the lowest reading since the survey result was published in nearly four years. The retail industry sub-index also edged down to 42, reflecting the industry’s prevailing bearish outlook.

Among the five components of the overall index, the “staff number” sub index (49.4) has gone below the 50 no-change mark for the first time, reflecting that local SMEs may freeze hiring in this quarter.

The other sub-indices for “sales amount”, “investments”, profit margin” and “global economic growth” have slipped to 35.0, 47.7, 33.9 and 23.2, respectively.

“The prevailing pessimism is broad-based as the high degree of external macroeconomic and financial market uncertainty is weighing on local SME sentiment,” said Kelvin Lau Kin-hang, senior economist at Standard Chartered Bank (Hong Kong).

If the sluggish business conditions continue, 19.1 per cent of the respondents may consider winding up within one year, of whom 5.1 per cent feel it could be even within the next three months.

“This means that we need at least one or two more quarters of data before we can confirm that our SME index has bottomed out,” Lau said.

“During economic downturn, companies should make use of technologies to stimulate growth,” said Gordon Lo Siu-chung, director (business management) at Hong Kong Productivity Council (HKPC).

The Standard Chartered Hong Kong SME Leading Business Index survey, conducted by HKPC and sponsored by Standard Chartered Bank (Hong Kong), aims to gauge local SMEs’ outlook on the overall business environment for the next quarter. The survey was conducted from late March to early April this year and drew response from 806 local stakeholders across eight major industries.

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