The latest Standard Chartered Greater Bay Area Business Confidence Index (GBAI) reveals that business sentiment across the region 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. A mixed picture emerged in sub-indices, with "new orders," "fixed asset investment," and "profit" falling below the 50 watershed level for current performance, seen as a correction following earlier front-loading activities.
Hong Kong's readings significantly outperformed the survey average, with the "current performance" sub-index rising 5.7 points to 57.9 and "expectations" increasing 1.8 points to 55.4. This sustained recovery was attributed to strong performance in 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 its GBA peers.
The survey revealed significant interest in Middle East expansion among GBA businesses, with 54.8% of respondents expressing interest in entering these markets. The United Arab Emirates (53.9%) and Saudi Arabia (53.2%) were identified as 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 this optimism, businesses identified several challenges to successful Middle East expansion, including lack of understanding of local laws and regulations (50.4%), opaque regulatory environments and foreign investment restrictions (43.1%), and cultural and business differences (42%). Crucially, 99.2% of respondents considered Hong Kong's world-class services pivotal to their Middle East expansion plans, particularly for navigating regulatory and compliance requirements.
Hunter Chan, Economist for Greater China at Standard Chartered, noted that with increasingly complex geopolitical risks, global corporations are actively diversifying supply chains and exploring new markets, giving rise to emerging trade corridors. The survey findings align with the Hong Kong Government's policy focus to establish a 'GoGlobal Task Force' to leverage Hong Kong's advantages as a platform for international expansion. The complete Standard Chartered GBA Business Confidence Index Report provides detailed analysis, while additional research is available through HKTDC Research.
The GBAI findings are significant for understanding regional economic resilience amid global uncertainties. The data suggests that while businesses remain cautious about external factors, underlying confidence persists, particularly in Hong Kong's recovery trajectory. The strong interest in Middle East expansion indicates shifting global trade patterns and new market opportunities for GBA companies. The overwhelming reliance on Hong Kong's professional services highlights the city's continued role as a critical hub for international business expansion, particularly in navigating complex regulatory environments in emerging markets.
