The Standard Chartered Greater Bay Area Business Confidence Index (GBAI) revealed that business sentiment for most companies in the Greater Bay Area remained steady during the fourth quarter of 2025 despite persistent external uncertainties. Following a rebound in the previous quarter, the indices showed a moderate quarter-on-quarter retreat, attributed to diminishing returns from front-loading activities and more cautious approaches to investment, financing, and capacity utilization.
The "current performance" index for business activity retreated to 50.3 from 54.7 in the previous quarter, while the "expectations" index dropped to 51 from 55.7. Despite these declines, both indices remained in expansionary territory, indicating that GBA businesses maintained a broadly positive outlook. The complete Standard Chartered GBA Business Confidence Index Report provides detailed analysis of these trends.
A mixed picture emerged in the sub-indices, with "new orders," "fixed asset investment," and "profit" sub-indices falling below the 50 watershed level for current performance. This correction followed the end of front-loading processes in earlier quarters, with subdued growth in loans and fixed-asset investment in the Chinese Mainland contributing to the slight downward trend. In contrast, expectations remained relatively positive, with sub-indices for "production/sales," "new orders," and "profits" all staying in expansionary territory, suggesting robust demand will likely persist through the first quarter of 2026 and beyond.
Hong Kong's readings significantly outperformed the survey average, confirming the city's economic rebound remained on course at year-end. The "current performance" sub-index increased 5.7 points to 57.9, while the "expectations" reading rose 1.8 points to 55.4. This sustained recovery in growth momentum was attributed to the city's "professional services" and "retail/wholesale" sectors. Wing Chu, Deputy Director of Research at HKTDC, noted that following the extension of the trade truce between the US and China, business sentiment in Hong Kong continued to improve, allowing the city to outperform peer cities across the GBA.
The survey examined GBA businesses' interest in expanding into the Middle East, with over half of respondents (54.8%) expressing interest. The UAE (53.9%) and Saudi Arabia (53.2%) were selected as the top two priority markets. Among companies interested in Middle East expansion, nearly 60% were engaged in trading/distribution activities, followed by manufacturing (42.7%) and logistics/storage (28.3%). Despite optimism about emerging opportunities, businesses identified challenges including "lack of understanding of local laws and regulations" (50.4%), "opaque local regulatory environment and restrictions on foreign investment" (43.1%), and "cultural and business differences" (42%).
To manage these challenges, 99.2% of respondents considered Hong Kong's world-class services pivotal to the success of their Middle East expansion plans, particularly emphasizing the professional services sector's role in navigating local regulatory and compliance requirements. Hunter Chan, Economist for Greater China at Standard Chartered, noted that with increasingly complex geopolitical risks, global corporates are actively diversifying supply chains and exploring new markets, giving rise to numerous emerging trade corridors. The survey aligns with Hong Kong Government's policy focus to establish the 'GoGlobal Task Force' to leverage Hong Kong's advantages as a 'go global' platform and deepen economic ties with the Middle East. Additional research insights are available through HKTDC Research publications.
The GBAI findings suggest that while external uncertainties continue to influence business decisions, the Greater Bay Area maintains resilience through diversification strategies and leveraging Hong Kong's unique position as a 'super-connector' for international expansion. The strong interest in Middle East markets indicates shifting global trade patterns and new opportunities for GBA businesses seeking growth beyond traditional markets.
