HKTDC Export Index for Q1 2018 Rebounds; Timepiece Outperforms

The latest study by the Hong Kong Trade Development Council (HKTDC) Research has found that the confidence level among Hong Kong exporters continues to rise, in line with the strengthening of global economic activity. The findings are based on the latest results of the HKTDC Export Index, which was published today. It found that for the first quarter of 2018, the Index stood at 49.4, up 4.8 compared to the fourth quarter of 2017.

Exporters in the six key industries showed increased confidence as to their likely export performance over the short term. This was most marked with regard to timepieces, where a sharp rebound in confidence delivered the highest reading of all the key industries (57 in 1Q18, up from 41.2 in 4Q17). Coming second and third to timepieces were machinery (53.8) and toys (51.4), with both venturing into expansionary territory. Things were less upbeat in the electronics (49.5), jewellery (44.1) and clothing (42.4) sectors where a degree of contraction was indicated. Overall, though, all of Hong Kong’s key exporting sectors are likely to enjoy something of an upturn compared to 4Q17, says the study.

HKTDC Director of Research Nicholas Kwan said that following the rise of Hong Kong’s total exports last year by eight per cent to HK$3875.9 billion, the momentum continued during the first quarter of 2018. Amid rising export confidence, Mr Kwan noted that local companies continue to face business challenges. Sixty per cent of the respondents experienced soaring labour costs in the past three months; while nearly 70 per cent of the respondents said they face more challenges from the continuing appreciation of the renminbi. “At this stage, the Sino-US trade conflict has limited impact on Hong Kong’s export performance. Instead, the appreciation of the renminbi and soaring labour costs have a more direct impact on local exporters.”

HKTDC Principal Economist (Greater China) Billy Wong said that Hong Kong businesses expressed confidence about prospects in major export markets, particularly the Chinese mainland, with the index for the market rising 2.1 to 50.3. This was followed by the United States (50.2) and Japan (50), while the index for the European Union rose from 47.5 to 49.1.

The HKTDC Export Index monitors the sentiment of Hong Kong traders and gauges near-term export prospects. Mr. Wong noted that other industry indices remained below the watershed mark of 50, but expansion has been satisfactory, including in the jewellery and electronics sectors, which rose 7.3 and 4.7 respectively. “We continue to expect Hong Kong exports to increase in value by six per cent and the volume of export by four per cent.”