Hong Kong Q2 Exports Index at seven-year high

HONG KONG - The HKTDC Export Index for the second quarter of 2018 has climbed to a 29-quarter high and indicated positive sentiment among local exporters for the first time in 12 months.

Released today by the Hong Kong Trade Development Council, the 2Q18 reading came in at 54.1, up from 49.4 in 1Q18. The results suggest that Hong Kong exports are likely to sustain their growth momentum over the near term.

However, exporters’ optimism is laced with caution, given current trade issues between the Chinese mainland and the United States.

HKTDC economists forecast Hong Kong exports to grow six per cent in 2018.

The HKTDC Export Index monitors the current export performance of Hong Kong traders and gauges their near-term prospects. Readings above and below 50 indicate positive and negative sentiment respectively.

Among major sectors, the indices for electronics and machinery performed exceptionally well, reaching 55.2 and 54.9 respectively in 2Q18, their highest levels since early 2013.

Toys continued the uptrend seen in the last two quarters, rising to 53.2. Clothing, while staying in contractionary territory, also showed signs of improvement with a 17-quarter high reading of 43.6.

Prospects appeared relatively less strong for timepieces (49) and jewellery (41.3), which posted lower readings than in 1Q18.

“Overall, Hong Kong exporters have shown a strong reversal in sentiment,” HKTDC Director of Research, Nicholas Kwan, said.

“Despite the mixed performances across sectors, exporters were generally positive about the outlook for major export markets.”

Exporters were cautiously optimistic about global markets

The European Union returned to expansionary territory for the first time since 2011, outperforming other major markets with the highest reading of 54 in 2Q18, up from 49.1 in 1Q18.

Close behind was the Chinese mainland, with its reading rising further to a 29-quarter high of 53.8. Similarly, exporters showed strong confidence in the Japan (51.3) and US (51.2) markets, with both indices at their highest in recent years.

HKTDC Economist Doris Fung noted that exporters’ optimism was laced with caution, given the current trade issues between China and the US.

The 2Q18 survey revealed that about half of respondents (55.4%) remained confident that the trade dispute would not have any impact on their exports, whereas 35.8 per cent expected it to have a slightly negative impact.

According to the survey results, any impact of the Sino-US trade friction has yet to materialise.

Hong Kong’s total exports grew by 9.3% year-on-year in the January-April 2018 period, following  8% growth for the whole of 2017.

Exports to the US (+8.5%) and EU (+10.2%) increased strongly while growth of exports to

Japan (+5.3%) moderated.

Both private consumption and business investment in developed markets continued to support growth, Fung noted.  www.hktdc.org (ATI).