China-US trade talks prompt improved exporter sentiment in Hong Kong

March 14, 2019

HONG KONG - The HKTDC Export Index for the first quarter of 2019 rebounded four points from the previous quarter to 39.2, indicating that confidence among exporters is growing across all sectors and markets.

"Progress in the trade talks between Mainland China and the United States has led to an improved sentiment. However, it is still expected the dispute will not be resolved imminently, so we are calling on local exporters to expand their business into new markets such as the Russian Far East and ASEAN countries," Hong Kong Trade Development Council Director of Research, Nicholas Kwan, said today.

The HKTDC Export Index gauges near-term export prospects. Readings above and below 50 indicate positive and negative sentiment respectively.

 Kwan noted that the indices remained below the watershed mark of 50, but expansion had been satisfactory, especially in the toys sector and the European Union market, which rose 17.1 and 5.6 points respectively.
 "Our forecast for export growth in 2019 remains unchanged - an increase of 5% in value and 3% in volume," he said.
Mr Kwan added that machinery was the most promising export sector, with a score of 42.2 points, followed by toys (41.4) and electronics (39.7). 

In terms of specific export markets, Japan (48) and the EU (47.4) enjoyed the most positive short-term market outlook, followed by the United States (46.1) and Mainland China (45.7).

HKTDC Economist Doris Fung said Hong Kong exporters were slightly more optimistic than before on the outcome of the Sino-US trade dispute.

Fewer respondents - 51.7%, compared with 54.4% in the last quarter - were concerned that it might adversely affect their export performance over the near term.

But despite the increase in optimism, almost half of respondents (48.5%) reported they had already experienced a negative impact related to the trade dispute, particularly in relation to reduced order sizes (69%).

Other impacts include price bargaining (34.9%), cancelled orders (22.7%) and sharing or bearing part of the tariff costs (16.2%).

Responding to the trade friction, over half of the respondents (54.1%) said they had considered developing markets outside the US. Other plans included moving the production or sourcing base (27.4%) and downsizing the company (19.9%). (ATI).