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The Chinese University of Hong Kong’s Department of Economics releases the survey results on Business Confidence in December 2006. The survey was conducted by Associate Professor Andy Kwan Check-Chiu of the Department of Economics. Chairmen or CEOs of 35 locally-listed enterprises were surveyed on the financial situation and profitability of the enterprises, and views about Hong Kong’s present and future economic situation in a form of questionnaire during 15 December 2006 and 20 January 2007.

The survey found that 80% of respondents thought the present economic situation is “better” compared to that of six months ago. 17% said “same as six months ago”. Only 3% thought “worse than six months ago”. Compared with the survey in June 2006, significantly more respondents (+30%) chose “better” and less (-7%) said “worse”.

When asked about the economic situation in the coming six months, 54% said will be “better” than now. And those expected “the same” or “worse” were 34% and 6% respectively. Compared with the last survey, those chose “better” increased 17% and those chose “worse” dropped 11%.

The survey also revealed 57% of respondents said the financial situation of their enterprises is “better” than that of six months ago. Those chose “the same” or “worse” were 40% and 3% respectively. Compared with the June 2006 survey, those chose “better” rose 17% and those chose “worse” decreased by 7%.

On the outlook of financial situation in the coming six months, 54% said “better” than the present, 37% said “the same” and 3% said “worse”. Those chose “better” rose 4% and those chose “worse” dropped 17% when compared with the December 2005 survey.

49% of respondents predicted the profitability of their enterprises would be better in the coming six months, whereas 40% said “the same” and 8% “worse”. Both those said “better” and those said “worse” dropped 4% and 9% respectively compared with the last survey.

Index of Business Confidence

The Index of Business Confidence was compiled from question# 2, 4 and 5. The first survey was conducted in June 2002 and the baseline index was 100. The higher the index, the better the confidence of local business leaders in the future economic situation and business environment.

The latest index is 108.4, an increase of 13.3 from last study. This is the first rise of the index since December 2005, indicating that positive factors such as robust growth of the Chinese economy, falling oil prices, flourishing domestic consumption are boosting business leaders’ confidence in local economic development in the first half of the year. As a rising Renminbi will help draw more hot money flowing into the local economy, it is expected local economic activities will grow stably and healthily in view of numerous favorable conditions.