In the next six months, many expect to see some stability in recruitment and investments among Hong Kong's small- and medium-sized enterprises (SME). This should demonstrate a sustainable business confidence in the local SME sector. These thoughts are what the latest HSBC global SME survey revealed.

HSBC released on Wednesday the results of its latest business confidence survey, which covered 6,346 SMEs from 21 markets. According to the data gathered, there is now growing business confidence throughout the world, and emerging markets have a more positive outlook than veteran markets.

The first half of 2010 revealed an increase in confidence among most Asian markets, with SMEs in Hong Kong and on the mainland remaining confident and those in Taiwan becoming more optimistic.

"We are expecting to see an increased money flow to Asia, China in particular, in the months to come," said Shaun Wallis, the Global Head of Business Management and Commercial Banking at HSBC. Wallis was responding to the concern that dire straits in Western markets could harm the progress of Asian economies. "The dynamic intra-regional trade will reduce Asia's reliance on trading with developed economies, and this will preserve the region's robust growth," assured Wallis.

Hong Kong SMEs share the global optimism observed in small businesses. Specifically, the survey shows that 82 percent of respondents have a stable and positive outlook on the local economy. It also shows that 53 percent of Hong Kong SMEs plan to sustain current investments, and 29 percent expect to increase capital expenditures. Moreover, one in 10 Hong Kong SMEs intend to expand their workforce in the next six months; and 89 percent stated that they will maintain current staff levels.

"When investment and recruitment increase together, it is a sure sign of confidence among Hong Kong's small businesses," said Wallis, who also suggested that renminbi transactions will become the focal point in small business investments.

"We are anticipating companies' growing interest in renminbi-related products, buoyed by the ongoing internationalization of the Chinese currency. We have seen the renminbi increasingly favored as a settlement currency. This reflects people's growing confidence in the Chinese currency," reasoned Wallis, adding that in May 2010, trade settlements with the renminbi in HSBC tripled, as compared to April. Wallis also explained that large cash surplus held by SMEs promises a huge growth potential for renminbi-related investments.

Currently, about a third of Hong Kong SMEs hold renminbi trade accounts, which now totals nearly 85,000 and will likely increase by another 60,000 in the next six months, in preparation for more transactions in the renminbi, the survey shows.

China Daily

(HK Edition 07/22/2010 page3)