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Policyholder Survey - Cautious Outlook for Prospects amid Global Economic Uncertainties

ECIC’s recent survey showed that policyholders have become more cautious about the export outlook due to the sluggish pace of global growth. The proportion of policyholders perceiving decreasing orders continued to be the main challenge, while that of worrying higher credit risk continued to increase.

Chart: Business Outlook for Next 12 Months
Chart: Business Outlook for Next 12 Months

Between June and August 2016, the ECIC interviewed 651 policyholders on the challenges ahead and their business outlook. All these policyholders are from industries including clothing, electronics, toys, jewellery, plastics and electrical appliances. Owing to the increased uncertainty for the external trade, the proportion of policyholders identifying rising credit risk as the major challenge rose further to 26.4%, increased by 1.8 percentage points when compared to previous three months (March to May 2016). Decrease in orders also surged by 5.4 percentage points to 36.3%. In addition, the proportion of policyholders identifying increase in labour costs as the major challenge amounted to 6.9%, dropped by 4.6 percentage points.

Regarding the business forecast for the coming year, the survey showed that the number of respondents anticipating their business to decrease rose from 7.2% to 10.1% when compared to previous three months. Policyholders expecting their business to remain unchanged stayed at 75.7% while policyholders expecting their business to increase fell by 3.2 percentage points to 7.7%. The statistics indicated that policyholders’ attitude towards their business development has turned more cautious than the previous three months.

For the respondents expecting an increase in business, the proportion placing hope on increasing orders rose by 2.8 percentage points to 52.3% but the overall number of policyholders remained low. The proportion of placing hope on improving global economy remained at 24.6%, which is comparable to the previous three months.

Chart: Challenges Faced by the Hong Kong Exporters
Chart: Challenges Faced by the Hong Kong Exporters

Pay Attention to Risks amid External Environment Fraught with Uncertainties

The external trading environment is still challenging and fraught with uncertainties, including those arising from Brexit, US interest rate normalisation, monetary policy divergence among major central banks and heightened geopolitical tensions in various regions. Exporters should pay more attention to country and buyer risks. The “Small Business Policy” offers permanent waiver of $1,000 annual policy fee and premium discount of 20%, helping SMEs reduce operating costs and enhance their competitiveness in the industry. More information is available on the ECIC website www.hkecic.com.

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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