Business Confidence Drops in Hong Kong Despite 'Growth Capital' Boost, Says ACCA's New Report

PR Newswire

HONG KONG, Aug. 7, 2013 /PRNewswire/ -- Access to growth capital in Hong Kong is at its most favourable for 18 months, but confidence has been dented by fewer business opportunities, pressure on cash-flow, and worrying signs from the Chinese mainland, according to new findings from the Global Economic Conditions Survey (GECS) from ACCA( http://www.accaglobal.com ) (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA).

GECS is the largest quarterly economic survey of accounting professionals in the world, gauging the views of ACCA and IMA finance professionals working at the coal face of businesses.

Half of all businesses who took part in the latest survey reported a loss of confidence, up from 40 per cent in the first quarter, and 58 per cent were pessimistic about the economic recovery.

Emmanouil Schizas, ACCA's senior economic analyst and editor of GECS, said, "Across the globe the survey shows the highest level of optimism about the national and global economies in two years, and the strongest year-on-year improvement in three years. However, underneath this positive story there are significant variations, with some markets not benefiting from the buoyant global mood. Hong Kong is one of those markets."

"Globally, despite continued positive news about the global and national economies, the GECS business confidence index has just about inched in the right direction. After a surge in business confidence in Q1 that was perhaps a little premature, confidence levels are now in line with fundamentals."

"What is encouraging is that the marginal improvement in global business dynamism in early 2013 has now accelerated across all measures of investment, orders and employment. Employment in particular is recovering quickly and is now stronger than at any point in the last two years."

Brenda Lam, Acting Head of ACCA Hong Kong, said, "We have seen a period of relative improvement over the last six months leading up to Q2, but demand and cash-flow conditions have deteriorated to levels last seen one year ago. Cash-flow pressures have returned and business opportunities have shrunk, even though access to growth capital has improved to levels unseen over the past 18 months. The good news coming from the finance teams within Hong Kong's businesses is that business capacity -- investment in both capital and staff -- has increased -- probably because a lack of external opportunities has focused businesses' attention on organic growth. However, business confidence in Hong Kong has taken a hit."

Respondents in Hong Kong have traditionally expected government spending to rise substantially in the medium-term, but are now beginning to revise their expectations downwards. Even though public spending is expected to carry on rising in Hong Kong, a slight tightening of fiscal policy in the medium term will have an impact on confidence and economic performance.

The Global Picture

On a global scale, GECS found both business confidence and optimism about the economy continued to rise during the second quarter of the year. Nearly half of the GECS sample -- 47 per cent -- felt that the state of the economy was improving or about to do so, up from 43 per cent in early 2013, while just under 50 per cent were pessimistic, predicting deterioration or stagnation, down from 54 per cent in the first quarter. This is the highest level of optimism about the national and global economies in two years, and the strongest year-on-year improvement in three years. The survey showed there was improved availability of growth capital on a global scale in the second quarter of 2013, which was driving confidence upwards.

Fewer respondents reported falling revenues and declining orders. There has been little change in the share of respondents worried about customers or suppliers failing, despite the tightening of cash-flow conditions. The second quarter also saw businesses reporting more investment and business opportunities being available particularly through investment in new markets, niche offerings, and high quality standards. A two year high of more than 26 per cent reported that their organisations had access to value-added opportunities and were not considering cost-cutting.

Read the full report here:

http://www.accaglobal.com/content/dam/acca/global/PDF-technical/global-economy/tech-ms-gec18.pdf

Notes to editors:

About GECS

This is the 18th edition of GECS. It had 1,833 responses in the second quarter of 2013.

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. As the first global accountancy body entering into China, ACCA now has over 23,000 members and 48,000 students, with 8 offices in Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen, Shenyang, Hong Kong SAR, and Macau SAR.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accounting professionals bring value to economies in all stages of development. We aim to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that, through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and their delivery to meet the diverse needs of trainee professionals and their employers.

We support our 162,000 members and 426,000 students in 173 countries, helping them to develop successful careers in accounting and business, with the skills needed by employers. We work through a network of 89 offices and centres and 8,500 Approved Employers worldwide, who provide high standards of employee learning and development.

For further information, please visit www.accaglobal.com or follow ACCA Hong Kong at www.facebook.com/ACCA.HongKong.

About IMA(R) (Institute of Management Accountants)

IMA(R), the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA(R) (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 65,000 members in 120 countries and 200 local chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit www.imanet.org

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