Standard Chartered GBA Business Confidence Indices Show Steady Sentiment Amid External Uncertainties

The latest Standard Chartered Greater Bay Area Business Confidence Index (GBAI), jointly released by Standard Chartered and the Hong Kong Trade Development Council (HKTDC), indicates that business sentiment for most companies in the Greater Bay Area remained steady amid persistent external uncertainties in the fourth quarter of 2025. Following a rebound in the previous quarter, the GBAI indices showed a moderate quarter-on-quarter retreat, attributed to diminishing returns from front-loading activities and a more cautious approach to investment, financing, and capacity utilization.

The "current performance" index for business activity retreated to 50.3 from 54.7 in the previous quarter, while the "expectations" index dropped to 51 from 55.7. Despite the drop, both indices remained in expansionary territory, indicating that GBA businesses maintained a broadly positive outlook. Regarding "current performance," the "new orders," "fixed asset investment," and "profit" sub-indices all fell below the 50 watershed level, seen as a correction following the end of the front-loading process in earlier quarters. Subdued growth in loans and fixed-asset investment in the Chinese Mainland also contributed to this slight downward trend.

In contrast, "expectations" remained relatively positive, with sub-indices for "production/sales," "new orders," and "profits" all staying in expansionary territory. These upbeat outcomes suggest a strong likelihood that robust demand will persist through the first quarter of 2026 and beyond. In terms of individual GBA city evaluations, Hong Kong's readings were well above the survey average, confirming that the city's economic rebound remained on course at year-end. The "current performance" sub-index rose 5.7 points to 57.9, and the "expectations" reading increased 1.8 points to 55.4, with sustained recovery attributed to the city's "professional services" and "retail/wholesale" sectors.

Wing Chu, Deputy Director of Research at HKTDC, noted that following the extension of the trade truce between the US and China, business sentiment in Hong Kong continued to improve, allowing the city to outperform its peer cities across the GBA. This strength contrasts with the broader moderation seen in the overall GBA indices amid persistent external uncertainties. The momentum in Hong Kong's recovery is expected to remain intact, supported by buoyant business activity and the professional services sector's solid performance. The HKTDC will continue to proactively support GBA enterprises in leveraging Hong Kong's professional services to "go global" and capitalize on opportunities in emerging markets, including those in the Middle East.

The survey also examined GBA businesses' interest in expanding into the Middle East, with over half of respondents (54.8%) expressing interest. The UAE (53.9%) and Saudi Arabia (53.2%) were selected as the top two priority markets. Among companies interested in or already expanding into the Middle East, nearly 60% were engaged in trading/distribution activities, followed by manufacturing (42.7%) and logistics/storage (28.3%). Despite optimism, businesses faced challenges, with top concerns including "lack of understanding of local laws and regulations" (50.4%), "opaque local regulatory environment and restrictions on foreign investment" (43.1%), and "cultural and business differences" (42%).

Crucially, 99.2% of respondents considered Hong Kong's world-class services pivotal to the success of their Middle East expansion plans, emphasizing the decisive contribution of the city's professional services sector in navigating local regulatory and compliance requirements. Hunter Chan, Economist for Greater China at Standard Chartered, highlighted that with increasingly complex geopolitical risks, global corporates are actively diversifying supply chains and exploring new markets, giving rise to emerging trade corridors. The survey found that GBA corporates' interest in entering the Middle East aligns with the Hong Kong Government's policy focus to set up the 'GoGlobal Task Force' to leverage Hong Kong's advantages as a 'go global' platform. The survey also found that almost all respondents indicate that Hong Kong services are needed to help in expansion into the Middle East to address challenges posed by local regulations and cultural differences. With its advantage in professional services, Hong Kong can further leverage its unique position as a 'super-connector,' becoming a springboard for enterprises to develop overseas markets. For more details, refer to the Standard Chartered GBA Business Confidence Index Report and HKTDC Research.