The latest Standard Chartered Greater Bay Area Business Confidence Index (GBAI), jointly released by Standard Chartered and the Hong Kong Trade Development Council (HKTDC), indicates that business sentiment for most companies in the Greater Bay Area remained steady during the fourth quarter of 2025 despite persistent external uncertainties. Following a rebound in the previous quarter, the GBAI indices showed a moderate quarter-on-quarter retreat, attributed to diminishing returns from front-loading activities and a more cautious approach to investment, financing, and capacity utilization.
The "current performance" index for business activity in Q4 retreated to 50.3 from 54.7 in the previous quarter, while the "expectations" index dropped to 51 from 55.7. Despite these declines, both indices remained in expansionary territory, indicating that GBA businesses maintained a broadly positive outlook. A mixed picture emerged in the sub-indices, with "new orders," "fixed asset investment," and "profit" sub-indices for current performance falling below the 50 watershed level, seen as a correction following the end of front-loading processes in earlier quarters. Subdued growth in loans and fixed-asset investment in the Chinese Mainland also contributed to this slight downward trend.
In contrast, expectations remained relatively positive, with sub-indices for "production/sales," "new orders," and "profits" all staying in expansionary territory. These upbeat outcomes suggest a strong likelihood that robust demand will persist through the first quarter of 2026 and beyond. Hong Kong's readings were well above the survey average, confirming that the city's economic rebound remained on course at year-end. The "current performance" sub-index rose 5.7 points to 57.9, while the "expectations" reading increased 1.8 points to 55.4. This sustained recovery in growth momentum was attributed to the city's "professional services" and "retail/wholesale" sectors.
Wing Chu, Deputy Director of Research at HKTDC, noted that following the extension of the trade truce between the US and China, business sentiment in Hong Kong continued to improve, allowing the city to outperform its peer cities across the GBA. This strength contrasts with the broader moderation seen in the overall GBA indices amid persistent external uncertainties. The momentum in Hong Kong's recovery is expected to remain intact, supported by buoyant business activity and the professional services sector's solid performance. The HKTDC will continue to proactively support GBA enterprises in leveraging Hong Kong's professional services to "go global" and capitalize on opportunities in emerging markets, including those in the Middle East.
The survey also examined GBA businesses' interest in expanding into the Middle East, with over half of respondents (54.8%) expressing interest. The UAE (53.9%) and Saudi Arabia (53.2%) were selected as the top two priority markets. Among companies that have already started or are interested in expanding into the Middle East, nearly 60% were engaged in trading/distribution activities, followed by manufacturing (42.7%) and logistics/storage (28.3%). Despite widespread optimism about emerging opportunities in the Middle East, many GBA businesses recognized challenges, with the top three concerns being "lack of understanding of local laws and regulations" (50.4%), "opaque local regulatory environment and restrictions on foreign investment" (43.1%), and "cultural and business differences" (42%).
Crucially, 99.2% of respondents considered Hong Kong's world-class services pivotal to the success of their Middle East expansion plans, particularly emphasizing the decisive contribution of the city's professional services sector in navigating local regulatory and compliance requirements. Hunter Chan, Economist for Greater China at Standard Chartered, stated that with increasingly complex geopolitical risks, global corporates are actively diversifying their supply chains and exploring new markets, giving rise to numerous emerging trade corridors. The thematic survey found that GBA corporates are interested in entering the Middle East, aligning with the Hong Kong Government's policy focus to set up the 'GoGlobal Task Force' to leverage Hong Kong's advantages as a 'go global' platform and deepen economic ties with the Middle East. The survey also found that almost all respondents indicate that Hong Kong services are needed to help in expansion into the Middle East to address challenges posed by local regulations and cultural differences. With its advantage in professional services, Hong Kong can further leverage its unique position as a 'super-connector,' becoming a springboard for enterprises to develop overseas markets. The full Standard Chartered GBA Business Confidence Index Report is available at https://www.sc.com/hk/gba/gba-index-report/, and additional research can be found at https://research.hktdc.com/en/article/MjIzMTk3MzQwOA.
