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HSBC survey: Singapore SME business confidence continues to rise
Business confidence among Singapore's small and medium-sized enterprises (SMEs) continues to climb, according to the latest HSBC Small Business Confidence Monitor. Singapore SMEs recorded the biggest jump in confidence level amongst their Asian peers in the survey, climbing 19 points from 117 to 136.

The findings on Singapore SMEs are part of the semi-annual HSBC Small Business Confidence Monitor which gauges the six-month outlook of SMEs on local economic growth, capital investment plans and recruitment. This sixth wave of the survey is the largest to date, capturing the views of more than 6,300 SMEs across 21 markets in Asia, the Middle East, Europe, North America and Latin America - the largest international survey of its kind. The results were used to calculate an index ranging from 0 to 200 where 200 represents the highest confidence level, 0 represents the lowest, and 100, neutral. The survey was conducted in May and June 2010 by research agency TNS for HSBC Commercial Banking.

Confidence across Asia
For the first time since the financial crisis, all Asian markets hold a positive outlook in terms of local economic growth as well as their recruitment and capital investment plans. SMEs across Asia sustained their level of confidence at 121 (versus 122 in 4Q09) reflecting signs of a steady recovery. Vietnam remained at the top, with an index of 164, followed by Singapore (136), mainland China (123) and India (121). Taiwan climbed 6 points from 97 to 103 placing it back in positive territory for the first time since the financial crisis.


a) Singapore's business confidence continue to rise, up 19 points from 4Q09.

Singapore's business confidence continue to rise, up 19 points from 4Q09.


b) First time all Asian markets in positive territory and confidence level increased year-on-year for vast majority.

First time all Asian markets in positive territory and confidence level increased year-on-year for vast majority.


Global levels of confidence
Confidence increased across the globe from 111 to 118, with emerging markets (122) appearing seven points higher than developed markets (115). Compared to the previous results in 4Q09, the developed markets increased from 106 to 115 (9 points) showing signs of increased positivity within the developed markets.

Most markets across the globe held a positive outlook, with Turkey leading at 138, followed by the Middle East (132), Greater China (121), India (121), South-East Asia (119), North America (119), Latin America (118) and Europe (99). Compared to the previous results in 4Q09, Turkey showed the biggest jump in confidence up 21 points, followed by North America (up 12 points) and the Middle East (up 7 points).


c) The index figures for all markets remain in positive or neutral. Most markets show increases in confidence but India
    dropped 11 points.


The index figures for all markets remain in positive or neutral. Most markets show increases in confidence but India dropped 11 points.


Commenting on the results, Ms Tan Siew Meng, Head of Commercial Banking of HSBC Singapore, said:

Our research indicates confidence levels in the emerging markets are stablising and moving toward pre-financial crisis levels. Emerging nations are conducting more trade with each other and reducing their exposure to the weakening Western economy and investors are finding emerging markets more attractive given the low return on Western assets. While these are growth factors for Asia, future risks such as those stemming from inflationary pressures will have to be navigated given that cooling measures have been introduced by certain governments in Asia.

Outlook on local economic growth
In terms of economic growth, most Singapore SMEs are bullish on the local economy, with 57 per cent (up from 39% in 4Q09) expecting the pace of economic growth to increase and 37 per cent (versus 50% in 4Q09) expecting it to maintain its current momentum in the next six months. Only 6 per cent (down from 11% in 4Q09) expect growth to slow down.

Over a third (34%) of SMEs globally and 35 per cent in Asia expect an increase in the pace of economic growth. Half (50%) of SMEs across the globe and 51 per cent in Asia expect this growth to maintain the same pace. In Turkey, 56 per cent of SMEs expect the pace of growth to increase, as do 49 per cent in the Middle East, followed by South-East Asia (47%), mainland China (31%), North America (30%), Latin America (28%) and India (27%). In Western Europe, only 10 per cent expect the pace of economic growth to increase.

Outlook on capital expenditure
Singapore SMEs are also more confident when it comes to investing in their own businesses. 42 per cent (up from 30% in 4Q09) are planning to increase their capital expenditures, 54 per cent say they will maintain current levels (versus 47% in 4Q09) and only 4 per cent are planning reductions (significantly down from 22% in 4Q09).

41 per cent globally and 39 per cent in Asia are planning to increase capital expenditure, led by Turkey (52%), Middle East (50%), South-East Asia (46%), Latin America (43%) and mainland China (42%).

Outlook on recruitment plans
98 per cent of Singapore SMEs will either expand their workforce (23%) or maintain their current staffing levels (75%) in the next six months. Only 2 per cent are planning to cut staff. Recruitment plans are positive for SMEs across all markets in the survey with 26% globally and 24% across Asia planning to recruit more staff in the next 6 months. Notable hiring increases are planned by 41 per cent of SMEs in Turkey, 35 per cent in the Middle East and 31 per cent in South-East Asia.

SMEs and international business
SMEs were also asked about the extent of their cross-border trade and other international business. About one in three (34%) SMEs in Singapore say they engage in international business today. The proportion with plans to engage in international business in the next two years remained unchanged (34%).

The main international business activities that Singapore SMEs are engaging in are importing (67%) and exporting (49%) and their top markets are South-East Asia (66%) and Greater China (55%).

Barriers to doing business internationally
Doing international business is not without its challenges. Among Singapore SMEs that are already international and those that are not, the top barriers cited were availability of financing (48%), local regulations and legal complexities (35%), and complexities of certain international markets such as foreign currency controls (33%).

Ms Tan said:

Forming a vital part of the local economy, the collective impact of small businesses is significant. Which is why it is encouraging to see that despite lingering global economic uncertainty, small businesses around the world are steadily getting confidence, evident in their growing appetite to invest and recruit. With our international footprint and local expertise and our longstanding track record in supporting SMEs, HSBC is well placed to provide small businesses the assistance and connectivity to seize business opportunities and growth. We receive the results of this wave of findings with a great deal of encouragement and optimism.
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