Standard Chartered GBA Business Confidence Index rebounds

24 October 2023, Hong Kong – Standard Chartered and the Hong Kong Trade Development Council (HKTDC) today released the Standard Chartered GBA Business Confidence Index (GBAI) for the third quarter of this year. The current performance for “business confidence” improved to 52.9 in Q3 from 50 in Q2, marking the highest reading in nine quarters. This reflects a rebound in the GBA’s business activity after a slowdown in Q2, likely helped by strong summer holiday demand, as well as some lift from the earlier rounds of policy easing measures implemented by the Chinese Government. Although the GBAI expectations index slipped to 56.3 from 58.7 prior, it remains well above 50, suggesting further recovery ahead.

Regarding city performance, the two cores in the GBA, Guangzhou and Shenzhen outperformed other cities in terms of the current performance index. Guangzhou rose to 54.9 from 48.6 in the previous quarter, while Shenzhen increased to 54.8 from 51.9 – a sign that the reopening boost still has legs. In terms of industry, Innovation and Technology as well as Retail and Wholesale achieved the highest scores in the current performance index. The current performance and expectations index for Innovation and Technology saw the largest rebounds among sectors, rising by 15.1 points and 6 points respectively quarter-on-quarter. The expectations sub-index for Financial Services also improved from Q2, reaching 57.1, to almost as strong as Retail and Wholesale’s print (57.5).

Kelvin Lau, Senior Economist, Greater China, Standard Chartered, said: “The GBAI surprised positively for a second straight quarter. For the Q3 GBAI prints, we are pleasantly surprised by the quick rebound in the current performance component, which increased to 52.9 in Q3 from 50 in Q2. In our view, this is a strong sign that businesses are stabilising, or even starting to reaccelerate, following the setback in Q2. Look forward, the key to the strengthening and sustaining the future recovery lies in continued policy stimulus from the authorities.”

Irina Fan, Director of Research, HKTDC, noted the innovation and technology sector’s contribution to the acceleration. She said: “The survey also found that technology-related developments have had varying degrees of impact on enterprises. It will bring opportunities as well as challenges. In the next few years, enterprises expect the impact of artificial intelligence (AI) technology to be more of an opportunity in areas like sales and operational efficiency than a challenge. This reflects the positive attitude of enterprises towards the adoption of AI technology, or a more comprehensive digital transformation strategy."

In addition, the survey also captured the perspectives of GBA companies on the rapid development of technology. 29.1% of the respondents expressed optimism about the development of Artificial Intelligence (AI) and believed that it would bring changes to their business models. Furthermore, 46.3% of the respondents stated that they already have some planning or strategising underway. Only just under 30% of respondents have no for plans for AI or digital upgrading for now. The survey found that the biggest hurdles or obstacles for adopting AI to their business in the future are “too costly to upgrade or implement”, which topped the list at 36%, followed by “uncertain economic or business outlook to justify investment” at 29.4%; and “lack of expertise or talents to pursue innovation” at 29%.

The GBAI is the first forward-looking quarterly survey in the market that looks at the business sentiment and synergistic effects in cities and industries across the GBA. It is compiled based on a survey of more than 1,000 companies in the GBA covering the manufacturing and trading, retail and wholesale, financial services, professional services, and innovation and technology sectors. The index enables investors and businesses to better understand the current business climate, gauge future performance prospects and formulate their market strategies for the GBA.

Related materials

• Standard Chartered GBA Business Confidence Index Report: https://www.sc.com/hk/gba/gba-index-report/
• HKTDC Research: https://research.hktdc.com/en/article/MTUxNDAyODk1NA

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About HKTDC

The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong's trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus.