The latest Standard Chartered Greater Bay Area Business Confidence Index (GBAI) shows a broad-based recovery in business sentiment in the third quarter of 2025, with both the 'current performance' and 'expectations' indices reaching multi-year highs. The 'current performance' index rose to 54.7 from 53.1 in Q2, while the 'expectations' index increased to 55.7 from 52.0, marking a four-year and two-year high, respectively. The improvement is attributed to reduced external uncertainty following the extension of the US-China trade truce.
During the survey period from early August to early September, the US extended the trade truce with China by another 90 days to November, despite reciprocal tariffs coming into effect. The constructive dialogue between the two countries diminished tariff uncertainty and stabilized the external environment, supporting a quarter-on-quarter recovery in business sentiment.
Almost all 'current performance' and 'expectations' sub-indices rebounded. For 'current performance', six of the eight index components improved quarter-on-quarter, led by a sharp 8-point increase in 'new orders' (to 57.5 from 49.5) and a 4.1-point rise in 'prices of finished goods/services' (to 58.8 from 54.7). The positivism in business outlook was more pronounced, with all 'expectations' sub-indices staying well above the neutral mark. 'Production/sales' saw the strongest rebound (+5.3 points), followed by 'financing scale' (+4.8 points), 'fixed asset investment' (+4.2 points), and 'profit' (+3.9 points).
Across GBA cities, nearly all sub-indices rose quarter-on-quarter. Hong Kong experienced the strongest rise in confidence, with its 'current performance' and 'expectations' sub-indices increasing by 8.3 points and 7.3 points to 52.2 and 53.6, respectively, underpinned by continued trade frontloading and robust financial activities.
Hunter Chan, Economist, Greater China, Standard Chartered, noted that the survey findings align with the positivism seen across markets in Q3 following the trade truce extension. However, he cautioned that persistent trade uncertainty may hold back business sentiment again. With increasing external uncertainties and competition challenges in Mainland China, the trend of diversification is expected to continue. The survey found that exploring overseas markets (24.5%) remains a key strategy for GBA corporates to mitigate potential risks.
The survey also examined the impact of 'anti-involution' or excessive competition. Most respondents (63.5%) indicated they had not been affected by excessive domestic competition, while 3.1% said they benefited. About 29% reported a moderate impact, and 5% indicated a significant impact. Among businesses affected, over 70% saw negative impacts on profit and sales, while only around 40% reported disruptions to hiring and investment. Companies are adopting multiple strategies to address these challenges, including brand building and marketing (36.3%), cost control/inventory management (35.6%), and providing value-added services (29.7%).
The GBAI is compiled based on a survey of over 1,000 companies in the GBA covering manufacturing and trading, retail and wholesale, financial services, professional services, and innovation and technology sectors. For more details, the full report can be accessed at HKTDC Research.
