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Policyholder Survey - Cautious on Export Trade Outlook Looking for Opportunities in Emerging Markets

The ECIC’s recent survey showed that policyholders remain cautious about the export outlook due to uncertainties in the global economy. Decreasing orders remained the main challenge. However, the proportion of policyholders who perceive the emerging market as an opportunity for growth increased.

Chart: Business outlook for next 12 months
Chart: Business outlook for next 12 months

Between September and November 2016, the ECIC interviewed 631 policyholders on the challenges ahead and their business outlook. These policyholders are from industries including clothing, electronics, toys, jewellery, plastics and electrical appliances. Owing to the continuous uncertainty for external trade, the proportion of policyholders who identified rising credit risks as the major challenge was 26.1%, similar to the previous 3 months (June to August 2016). The decrease in orders also increased slightly by 1.7 percentage point to 38.0%. In addition, the proportion of policyholders who identified an increase in labour costs as the major challenge dropped by 1.3 percentage point to 9.5%.

Regarding the business forecast for the coming year, the survey showed that the percentage of respondents who anticipated that their business would decrease dropped from 10.1% to 8.7% when compared to the previous 3 months. The percentage of policyholders who expected their business to remain stable increased by 3.9 percentage point to 79.6%, whilst the proportion of policyholders who expected their business to increase fell by 2.3 percentage point to 5.4%. The statistics indicate that policyholders’ attitudes towards their business development remained cautious, like the previous three months.

For the respondents who expected an increase in business, the proportion who placed hope on increasing orders surged by 11.2 percentage point to 63.5%, but the overall number of policyholders remained low. The proportion who placed hope in the development of emerging markets increased sharply to 17.5%, up 11.3 percentage point from the previous 3 months.

Chart: Challenges faced by the Hong Kong exporters
Chart: Challenges faced by the Hong Kong exporters

Prudent Risk Management in Face of Uncertainties

In 2016, the global economy remains stagnant. Political risks will continue to affect economic recovery and monetary policies. The export outlook is far from promising. Exporters should maintain prudence and remain alert to country and buyer risks. The ECIC’s “Small Business Policy” offers a permanent waiver of the HK$1,000 annual policy fee and a premium discount of 20% to help SMEs reduce their 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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