HK worst performer in Greater Bay business

Business confidence in the Greater Bay Area continued to improve in the fourth quarter of 2020, but Hong Kong remains the worst performer given the fresh wave of coronavirus infections, a survey by Standard Chartered Bank (Hong Kong) and Hong Kong Trade Development Council showed.

The GBA Business Confidence Index, based on quarterly surveys of more than 1,000 companies in the region, climbed to 50.2 from 42.4 in the third quarter. A reading of 50 is neutral.

But the forward-looking "expectations" index eased to 54.1 from 56.2, it remains in expansion territory, reflecting a more normalized pace of improvement.

The survey shows a broad-based recovery led by production and sales, orders and profits.

"Innovation and technology" was overtaken by "manufacturing and trading,'' which posted a sector-best 51.6 for “current performance” and 55.4 for "expectations,'' boosted by robust production and exports.

Manufacturers also largely saw borrowing costs bottom out as monetary policy turned neutral, but this was offset by improved surplus cash and receivables turnover, the report said.

Dongguan and Foshan outperformed as the cities continued to play catch-up, enjoying a positive spillover from Shenzhen and Guangzhou.

Respondents expect the GBA to maintain a competitive edge over other economic zones in China, while citing talent quality as an area of improvement.

However, Hong Kong stayed below 40 in terms of business activity, reflecting contractionary pressure as it deals with the virus resurgence.

Hong Kong could remain an underperformer within the GBA for longer as headwinds linger from widespread travel bans and its rising unemployment, keeping the city’s recovery shallow in 2021, the report said.