29 Sept 2017
Policyholder Survey – Geopolitical Uncertainties Lead to Rising Concerns on Order Reduction
HKECIC’s recent survey showed that despite Hong Kong’s performance improving in recent months, policyholders remained prudent about the export outlook as geopolitical risks have intensified. Decreasing orders and higher credit risks continued to be the main challenges. The survey also revealed that policyholders have faced less pressure on operating costs.
Between June and August 2017, the HKECIC interviewed 794 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 31.8%, rebounding from 27.3% when compared to the previous three months (March to May 2017), while policyholders identified rising credit risks as the major challenge decreasing by 4 percentage points to 21.1%.
Regarding the business forecast for the coming year, the survey showed that the number of respondents anticipating their business to decrease dropped from 10.4% to 3.3% when compared to the previous three months. Policyholders expecting their business to remain stable was at 65.1%, while policyholders expecting their business to increase dropped over 3 percentage points to 3.0%. The statistics indicated that policyholders’ attitude towards their business development has remained cautious.
For the respondents expecting an increase in business, the proportion placing hope on improving global economy fell to 16.5% from 21.8% while the proportion of placing hope on increasing orders slumped by almost 9 percentage points to 49.5% when compared to the previous three months. However, the proportion anticipating opportunities from reduction in operating costs, financing cost and raw material cost was 24.2% in total, against 4% in previous three months; cost pressure seemed to have eased.
Strengthen Risk Management amid Rising Geopolitical Risk
Volatile oil prices and increasing geopolitical risks have emerged as sources of uncertainty affecting the global economic recovery. Exporters should maintain prudence and remain alert to country and buyer risks. To support SMEs, the HKECIC offers a new “Fixed Amount Cover Endorsement” under the Small Business Policy for 1-year period, which provides more flexible options to SMEs. More information is available on the HKECIC website www.hkecic.com.