HONG KONG: A survey by HSBC has found that business confidence among Hong Kong's small and medium-sized enterprises had the strongest increase in Asia in the fourth quarter of 2009.

The semi-annual HSBC Small Business Confidence Monitor gauges the six-month outlook of SMEs on local economic growth, capital investment plans and recruitment. The results were used to calculate an index ranging from 0 to 200, where 200 represents the highest confidence level, 0 represents the lowest, and 100, neutral.

Hong Kong's business confidence climbed 25 points from 83 to 108, the biggest index rise among the Asia regions in the survey, placing it back in positive territory. The Asia index rose from 107 in the second quarter of 2009 to 122 in the fourth quarter.

Local SMEs said they have been directly impacted by the global financial crisis in the last 12 months. Nearly two in three (61 percent) of businesses said their profit or turnover decreased by more than 10 per cent in the last 12 months compared to the previous year. However, 84 per cent say their business prospects look stable or better for the first half of 2010.

In terms of local GDP growth, 73 per cent of Hong Kong SMEs expect local GDP growth to maintain the same pace in the next six months. Fifteen per cent expect the pace to increase, and only 12 per cent expect growth to slow - an overall 33 point improvement over the SME economic outlook in the second quarter of 2009.

Hong Kong SMEs are also more confident when it comes to their investing in their own businesses in the first half of this year. Nearly one in three are planning to increase their capital expenditures, 48 percent say they will maintain current levels and 21 percent are planning reductions.

Hong Kong SMEs, who have largely maintained staff freezes over the last year, are starting to hire again. Fourteen percent of SMEs say they will increase staff in the next six months, up from five per cent in the second quarter last year. The number planning to reduce staff remains unchanged at two percent.

This fifth wave of the survey is the largest to date, capturing the views of more than 6,000 SMEs across 20 markets in Asia, the Middle East, Europe, North America and Latin America. Vietnam remained at the top, followed by India, the mainland Chinaand Singapore.

(HK Edition 02/03/2010 page4)