The Standard Chartered Greater Bay Area Business Confidence Index (GBAI) for the first quarter of 2026 shows that business sentiment among companies in the Greater Bay Area (GBA) remained stable despite ongoing geopolitical and trade headwinds, including oil price shocks and repercussions from the Middle East conflict. The index, jointly released by Standard Chartered and the Hong Kong Trade Development Council (HKTDC), indicates that GBA corporates are demonstrating resilience, supported by favorable policies from the Chinese government aimed at boosting the domestic economy.
The “current performance” index for business activity in Q1 edged down marginally to 49.9 from 50.3 in the previous quarter, while the “expectation” index moderated to 50.4 from 51. Both indices hovered around the 50-neutral mark, suggesting that GBA corporates are weathering the storm. The decline in the “current performance” index was driven mainly by “raw material inventory”, “fixed asset investment”, and “financing scale”, reflecting more cautious sentiment due to the Middle East conflict. However, “production/sales”, “prices of finished goods/services”, and “profits” all experienced quarter-on-quarter expansion.
The “expectations” index remained modestly positive despite heightened external uncertainties. “New orders” held steady at 51.5, while “prices of finished goods/services” rose to 58.5. However, “profits” fell below the 50-watershed level, implying that surveyed companies did not view price increases as sufficient to offset a likely rise in energy and material costs.
By city, Hong Kong is expected to maintain a solid growth performance. Both the “current” and “expectation” sub-indices edged down to 52.7 but still comfortably stayed in expansionary territory, supported by improvements in “financial services” and “innovation and technology” sectors. Tommy Wu, Senior Economist, Greater China and North Asia, Standard Chartered, noted: “With the prolonged Middle East conflict, we anticipate global energy prices to be higher for longer and the second-round effects to become more visible in the coming months. These will likely weigh on business sentiment and appetite on making fixed investment. Nevertheless, Hong Kong has once again demonstrated its resilience amid market turbulence, and such resilience is expected to attract more global capital into HKD and Renminbi assets as safe-haven allocation.”
The survey also investigated the impacts of supportive policies from the Chinese government aimed at stimulating domestic demand. Among the new policy measures introduced by the Ministry of Finance in January, most respondents cited “loan interest subsidies for small, medium and micro-sized enterprises” (38.4%), “large-scale equipment upgrade subsidies” (36.9%), and “consumer goods trade-in subsidies” (31.7%) as the top domestic demand-boosting policies likely to have the most positive impact on their business. Wing Chu, Deputy Director of Research, HKTDC, said: “Demand-boosting stimulus is generating tangible benefits for GBA companies, helping to cushion external challenges amid the Middle East conflict. Targeted support, including loan interest subsidies, alongside measures aimed at stimulating consumer spending, is underpinning demand and supporting business activity across the GBA.”
While many respondents believe stimulative policies could benefit their businesses by boosting online sales (36.6%) and reducing operating costs (33.8%), challenges remain. Specifically, 54.9% of respondents identified labor costs as the biggest pressure point, followed by rental costs (41.7%) and market competition (33.3%). In Hong Kong, market competition was viewed as a more pressing challenge than rental costs, likely due to the increase in cross-border travel and change in consumption behaviors. In response, 38.7% would prioritize investment in talent recruitment, followed by market promotion (38.1%) and personnel training (36.7%).
The GBAI is the first forward-looking quarterly survey that looks at business sentiment and synergistic effects across the GBA. It is compiled based on a survey of more than 1,000 companies covering manufacturing and trading, retail and wholesale, financial services, professional services, and innovation and technology sectors. The full report is available on the Standard Chartered website.
