A survey conducted by Standard Chartered and the Hong Kong Trade Development Council (HKTDC) has revealed companies in the Guangdong-Hong Kong-Macao Greater Bay Area hold a cautious outlook amid uncertainty around trade agreements.
While only some 10% of respondents to the Standard Chartered GBA Business Sentiment Index (GBAI) survey in Q2 saw a direct material impact from US tariff hikes, 41% said the tariffs would delay the implementation of their business plans.
Business cited difficulty in navigating logistics and customs and losing business to other markets with lower tariffs as other major impacts.
Meanwhile, 32% of the respondents said they would sell more into the domestic market as the most expedient way to address the US tariff shocks and associated uncertainties.
HKTDC Director, Research Irina Fan said: “Some 75-80% of GBA companies see negative impacts from the US tariffs, mostly due to delays in business plan implementation and logistics disruptions.”
The survey was conducted in April shortly after ‘Liberation Day’ when the US announced tariffs against its trade partners and did not capture more recent developments, noted Ms Fan.
The “current performance” index for business activities fell marginally from 53.5 in Q1 to 53.1 in Q2 supported by positive scores in the index components for production/sales, fixed asset investment and profits. The data indicates that the immediate impact of tariff announcements on businesses was supported by front-loading orders and production.
However, the expectations index fell from 54.3 in Q1 to 52.0 in Q2, the weakest result since the final quarter of 2022. Seven of the eight expectations sub-indices fell, with the greatest declines recorded in financing scale, finished goods/services prices and production/sales.
Nevertheless, the indicator remained above the neutral mark of 50, indicating overall positive sentiment.
Standard Chartered Senior Economist, Greater China and North Asia Kelvin Lau said: “Looking ahead, the findings revealed a more cautious view of GBA businesses amid the uncertain business outlook in the second half, especially regarding the outcome of bilateral trade deals after the 90-day pauses.”
In terms of sectors, businesses in the innovation and technology sector recorded positive sentiment for both current performance and future expectations, while sentiment in the manufacturing and trading and retail and wholesale industries was negative for both indicators.
Sentiment in individual cities was the most negative in Hong Kong, partly reflecting its vulnerability to the external environment and domestic consumption struggles, while sentiment was also poor in Guangzhou.
The Standard Chartered GBA Business Confidence Index is a forward-looking quarterly survey gauging business sentiment across cities and industries in the GBA.
1,000 companies in the GBA region are surveyed on their overall operations, business environment and expansion plans. Industries surveyed include manufacturing & trading, retail & wholesale, financial services, professional services and innovation & technology.