Hong Kong exporter sentiment jumped to 4-year high

Local exporters are optimistic but still cautious.

The HKTDC Export Index, for the second quarter of 2017 (2Q17), has climbed to a 16-quarter high of 50.1 and up from the 47.1 recorded in the first quarter of the year, the Hong Kong Trade Development Council (HKTDC) announced. 

The results are the first since the second quarter of 2013 to surpass the 50 mark, reflecting positive sentiment amongst local exporters. HKTDC Research also raised its 2017 Hong Kong export growth forecast to five per cent from a flat projection issued last December.

"Overall, exporters have turned cautiously optimistic with regard to their likely export performance over the short term," HKTDC Director of Research Nicholas Kwan said at today's press conference.

"Given an improving global trade environment, Hong Kong's export performance has been above par thus far. With the expansion in both developed and emerging economies staying generally on course, overall foreign demand should remain sturdy over the medium term, although growth of Hong Kong exports is expected to moderate in the second half of 2017 amid a higher comparison base," he added.

Nevertheless, Kwan warned of major downside risks, namely an undercurrent of protectionism in the United States, political uncertainties in the European Union and heightened geopolitical tensions.

According to the 2Q17 Export Indices for individual markets, China surpassed the US and Japan as the most promising market as viewed by local traders. The Chinese mainland market figure was 51.9, whilst the EU was up slightly to 49.6, and numbers for the Japan and the US declined. The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects. Readings above and below 50 indicate positive and negative sentiment, respectively.

"Helped by a low comparison base and faster recovery of the global economy, Hong Kong's export performance has so far been above expectations," said HKTDC Principal Economist (Global Research) Daniel Poon. Hong Kong exports surged 9.4 per cent year-on-year in the first four months of 2017, reversing a 0.5 per cent fall during the whole of 2016.

"In the developed world, rising confidence and falling joblessness have continued to fuel US growth. Given accommodating policies, improving labour markets and increasing exports, the EU is also witnessing a cyclical economic upturn, whilst the Japanese economy is growing at a modest pace amid sustained fiscal stimulus and steady exports," Mr Poon said.

In the first four months of this year, Hong Kong exports to the US rose 1.3 per cent, those to the EU were up three per cent, and those to Japan increased 5.3 per cent.

Whilst Hong Kong exporters are advised to intensify their sales efforts to capitalise on growing opportunities in the developed world, they should not overlook emerging economies, which are expected to continue to do well over the medium term, he said.

"A projected stabilisation of oil and commodity prices should continue to augur well for the economies dependent on natural resources," remarked Mr Poon. He added that an improved appetite for consumption in developed nations will further boost export-oriented emerging economies at large.

"Developing Asia continues to be the most dynamic region," said Mr Poon, noting that although China is experiencing slower growth in the midst of economic restructuring, its pace of expansion is still relatively enviable. In the first four months of 2017, Hong Kong exports to the mainland and ASEAN grew 10.3 per cent and 8.6 per cent respectively.