GBA Business Sentiment Steady as Hong Kong Outperforms, Eyes Middle East Expansion

Standard Chartered and the Hong Kong Trade Development Council (HKTDC) have released their latest Greater Bay Area Business Confidence Index (GBAI), revealing that business sentiment in the region remained steady during Q4-2025 despite persistent external uncertainties. The indices showed a moderate quarter-on-quarter retreat from previous highs, with the "current performance" index dropping to 50.3 and "expectations" falling to 51, though both remained in expansionary territory. This retreat was attributed to diminishing returns from front-loading activities and more cautious approaches to investment amid ongoing global uncertainties. The survey, which examines business sentiment across the Guangdong-Hong Kong-Macao Greater Bay Area, provides crucial insights for investors and businesses operating in this dynamic economic region.

While the overall GBA indices showed moderation, Hong Kong emerged as a standout performer with readings well above the survey average. The city's "current performance" sub-index rose 5.7 points to 57.9, while "expectations" increased 1.8 points to 55.4, confirming that Hong Kong's economic rebound remained on course at year-end. Wing Chu, Deputy Director of Research at HKTDC, noted that following the extension of the US-China trade truce, business sentiment in Hong Kong continued to improve, allowing the city to outperform its peer cities across the GBA. This sustained recovery was attributed to strong performance in professional services and retail/wholesale sectors, with Hong Kong positioned to help GBA enterprises leverage its advantages to "go global" and capitalize on emerging market opportunities.

The survey also revealed significant interest among GBA businesses in expanding into Middle Eastern markets, with over half of respondents (54.8%) expressing interest in this expansion. The United Arab Emirates (53.9%) and Saudi Arabia (53.2%) were identified as top priority markets, with trading/distribution activities (60%), manufacturing (42.7%), and logistics/storage (28.3%) being the primary sectors interested in expansion. However, businesses also identified challenges including lack of understanding of local laws and regulations (50.4%), opaque regulatory environments (43.1%), and cultural differences (42%). Crucially, 99.2% of respondents considered Hong Kong's world-class services pivotal to their Middle East expansion plans, particularly for navigating regulatory and compliance requirements. Hunter Chan, Economist for Greater China at Standard Chartered, emphasized that with increasing geopolitical risks, global corporates are actively diversifying supply chains and exploring new markets, creating emerging trade corridors where Hong Kong can serve as a "super-connector" and springboard for overseas market development.