Exporters Exercise Caution

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Hong Kong, March 18: The HKTDC Export Index has fallen by 12.5 points to 24.7 in the first quarter of this year, the Hong Kong Trade Development Council (HKTDC) announced, recently.
“The index shrinking for the third consecutive quarter can be taken as a clear indication that the prospects for short-term export growth are expected to weaken further,” HKTDC Director of Research Irina Fan said.
However, the Trade Value Index painted a more optimistic picture, as it remained in expansionary territory at 52.8, despite its reading having dropped from 57 in the previous quarter.
“This robust outcome indicates that unit prices in most sectors will continue to rise in the near term, with the toy and electronics sectors leading the way at 56.7 and 53.5 respectively,” Fan said.
The survey found that, unsurprisingly, a majority (93.1 per cent) of respondents indicated that their businesses had been negatively affected by the COVID-19 pandemic over the past three months, a rise of 6.1 percentage points on the previous quarter.
Among the key negative impacts cited were rising transportation costs (75.7 percent), ongoing disruptions to logistics and distribution arrangements (64.5 per cent) and shortages in raw materials, parts and components (46.5 per cent).
“In light of rising costs, the pricing response from companies has been notably mixed.
“While 46.8 per cent of respondents indicated they had been able to pass on at least some of their increased costs to buyers, 48.1 per cent maintained this had not been an option.
“In addition, about one third (34.2 per cent) of respondents expected their profit margins to rise or stay at the same level, while 65.8 per cent predicted their profits margins would fall year-on-year over the course of the next 12 months,” she added.

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Exporters Across Sectors Remain Cautious

The HKTDC conducts the Export Index survey every quarter, interviewing 500 local exporters from six major industries including machinery, electronics, jewellery, watches and clocks, toys and clothing, to gauge business confidence in near-term export prospects. 
The Index indicates an optimistic or pessimistic outlook, with 50 as the dividing line.
The Export Index dropped by 12.5 points to 24.7 for the third consecutive quarter. 
“In line with this, exporter confidence continues to plunge across almost all industry sectors and major markets,” HKTDC Economist Samantha Yim said.
“Across many of the major sectors, exporters remained notably cautious.
“This saw timepieces emerge as the least positive sector at 19.7, while machinery recorded the largest drop, falling 19.1 points to 25.0.
“By contrast, the toy sector was the only one to merit an increased read, up 8.5 points to 33.5.”
Exporters were similarly pessimistic when it came to the near-term prospect of Hong Kong’s major markets, with all the associated sub-indexes declining.
Overall, Asia continued to be seen as likely to be the best performer over the coming months, with the best performer being Japan at 45.6, followed by Mainland China (42.1). 
On the other hand, the US dropped 3.8 points to 39.1, an outcome seen as less than promising.

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Challenges And Strategies In 2022

Looking ahead, an increased number of respondents were concerned about the impact of COVID-19 (53.5 per cent) – a significant climb from the 32.5 per cent of respondents reporting the same sentiment in the previous quarter.
A further 11.4 per cent indicated that prospects of a stuttering economic recovery remained among their key challenges, while 9.3 per cent worried about the continued closure of borders.
In terms of business strategies for the year, 38.5 per cent of respondents favoured developing other product lines, followed by diversifying into new overseas markets (29.9 per cent) and developing online sales or sourcing channels (29.4 per cent).
In December 2021, the HKTDC forecasted that Hong Kong exports will grow by eight per cent in value this year.

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