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Policyholder Survey – Increasing Credit Risks despite Restored Confidence in Emerging Markets

HKECIC’s recent survey showed that policyholders were more confident about emerging market as global demand is steadily reviving, despite uncertainties in the trading environment are still salient. However, decreasing orders and higher credit risks continued to be the main challenges.

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

Between September and November 2017, the HKECIC interviewed 498 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 27.6%, slightly decreased from 31.8% when compared to previous three months (June to August 2017), while policyholders identified rising credit risks as the major challenge increased by 6.5 percentage points to 27.6%.

Regarding the business forecast for the coming year, the survey showed that the number of respondents anticipating their business to remain stable was at 84.1%, representing a significant increase from 65.1% when compared to the previous three months. Policyholders expecting their business to increase and decrease were 3.0% and 3.6% respectively, which are comparable to the previous three months. The statistics indicated that policyholders’ attitude towards their business development has remained prudent.

For the respondents expecting an increase in business, the proportion placing hope on improving global economy rose to 21.6% from 16.5% while the proportion of placing hope on increasing orders increased by 5 percentage points to 54.5% when compared to the previous three months. However, the proportion anticipating more opportunities in emerging markets accounted for 10.2%, reflecting exporters have turned more upbeat about the emerging markets’ prospects.

 

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

Pay Attention to Risks amid Policy Uncertainties

The global economic upturn is expected to continue to render support to Hong Kong's exports in the near term. However, external uncertainties persist, including the uncertain pace of US monetary policy normalisation and possible policy actions by other major central banks. Exporters should maintain prudence and remain alert to country and buyer risks. HKECIC’s “Small Business Policy” offers a permanent waiver of annual policy fee and premium discount of 20%, helping SMEs reduce operating costs and enhance their competitiveness in the industry. Furthermore, 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.

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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