Standard Chartered GBA Business Confidence Indices Reach Multi-year Highs Amid Trade Truce Stability

The latest Standard Chartered Greater Bay Area Business Confidence Index revealed significant improvement in business sentiment during the third quarter of 2025, with indices climbing to their highest levels in several years. The quarterly survey conducted jointly by Standard Chartered and the Hong Kong Trade Development Council showed the current performance index rising to 54.7 from 53.1 in the second quarter, while the expectations index increased to 55.7 from 52, marking four-year and two-year highs respectively.

The recovery in business confidence occurred during the survey period from early August to early September, coinciding with reduced external uncertainty following the extension of the US-China trade truce by another 90 days to November. Despite the implementation of reciprocal US tariffs, the constructive dialogue between China and the US created a more stable external environment that supported quarter-on-quarter improvement in business sentiment across the region.

Nearly all sub-indices showed positive momentum, with six of the eight current performance components recording quarter-on-quarter improvement. New orders demonstrated the strongest growth, surging 8 points to 57.5 from 49.5 in the previous quarter, while prices of finished goods and services increased 4.1 points to 58.8. The optimism in business outlook was even more pronounced, with all expectations sub-indices remaining well above the neutral mark. Production and sales showed the strongest rebound among the eight main sub-indices with a 5.3-point increase, followed by financing scale (+4.8 points), fixed asset investment (+4.2 points), and profit (+3.9 points).

Irina Fan, Director of Research at HKTDC, noted that nearly all current performance and expectations indices rose quarter-on-quarter across GBA cities. Hong Kong exhibited the strongest confidence growth among all cities, with current performance and expectations sub-indices increasing 8.3 points and 7.3 points to 52.2 and 53.6 respectively, supported by continued trade frontloading and robust financial activities. Additional research materials are available through HKTDC Research and the full report can be accessed at http://bit.ly/4oiGQDU.

Hunter Chan, Economist for Greater China at Standard Chartered, indicated that the survey findings aligned with market optimism observed during the third quarter following the trade truce extension and expectations of continued dialogue between the two countries. However, he cautioned that persistent trade uncertainty could potentially dampen business sentiment again. With increasing external uncertainties and competition challenges in mainland China, the trend of diversification appears likely to continue, consistent with findings that exploring overseas markets remains a key strategy for 24.5% of GBA corporations seeking to mitigate potential risks.

The survey also examined the impact of excessive competition, with most respondents indicating they had not been affected by domestic competition challenges. Among businesses affected by involution, over 70% reported negative impacts on profit and sales, while only around 40% indicated disruptions to hiring and investment. Companies are adopting multiple strategies to address these challenges, including brand building and marketing, cost control and inventory management, and providing value-added services.