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Policyholder Survey – Concern on Credit Risk Remains amid Cautious Stance on Global Economy

HKECIC’s recent survey showed that policyholders remained cautious about the export outlook despite the fact that the global economy is improving. Decreasing orders continued to be the main challenges while the proportion of those worrying about higher credit risks also continued to rise.

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

Between March and May 2017, the HKECIC interviewed 637 policyholders on the challenges ahead and their business outlook. These policyholders are from industries including clothing, electronics, toys, jewellery, plastics and electrical appliances. The proportion of policyholders identifying decrease in orders as the major challenge was 27.3%, decreased from 29.9% when compared to previous three months (December 2016 to February 2017). Yet, policyholders who identified rising credit risks as the major challenge increased by 3.3 percentage points to 25.1%. In addition, the challenge of direct competition from Mainland manufacturers/exporters amounted to 16.7%, rising by 4 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 6.6% to 10.4% when compared to the previous three months. Policyholders expecting their business to remain stable decreased by 1.6 percentage points to 74.2%, while policyholders expecting their business to increase dropped by 2.5 percentage points to 6.1%. The statistics indicated that policyholders’ attitude towards their business development has turned cautious when compared to the previous three months.

For the respondents expecting an increase in business, the proportion placing hope on improving global economy rebounded to 21.8% from 6.2% but the overall number of policyholders remained low. The proportion of placing hope on increasing orders fell by 13.9 percentage points to 58.4% when compared to the previous three months.

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

Remain Alert to Risks in Face of Uncertain Outlook

The gradually strengthening global economic conditions should continue to render support to Hong Kong's export performance in the near term. Nevertheless, the export outlook is still subject to uncertainties. Exporters should maintain prudence and remain alert to country and buyer risks. HKECIC’s “Small Business Policy” offers a 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 HKECIC Website www.hkecic.com.

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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