While global economic conditions remain a concern, senior finance executives – including those based in Hong Kong – see robust opportunities for growth over the next 12 months.
According to recent research from American Express and CFO Research, 94 percent of Hong Kong senior finance executives expect economic expansion, 72 percent of them expect to see more mergers and acquisitions (M&A) activity globally and 72 percent of them express their companies’ intent to ramp up hiring over the next year.
Senior finance executives are very optimistic about Hong Kong’s economic growth, with a combined 94 percent expecting modest to substantial economic expansion in the next 12 months. Hong Kong ties for second place with China in this respect, with Brazilian CFOs being the most optimistic globally. Hong Kong CFOs’ optimistic view is the highest reported since the market was included in the global survey in 2010.
These were among the findings released in the sixth annual American Express/CFO Research Global Business and Spending Monitor, a random sampling of 519 senior finance executives from the U.S., Europe, Canada, Latin America, Asia and Australia.
“In general, companies in Hong Kong are optimistic about the future business environment and keen to expand through mergers and acquisitions,” says Jacinta Sheahan, Vice President and General Manager, Global Corporate Payments, Hong Kong and Taiwan, American Express. “However, the increasing cost of raw materials, the ongoing compliance burden posed by existing and new regulatory frameworks, and the slow recovery in other markets put a damper on this optimism.”
Hong Kong – Optimistic On Growth, Expansion and Spending
Hong Kong senior finance executives express a desire to increase headcount at a rate considerably higher than their counterparts around the world (72 percent for Hong Kong; 54 percent of all). They are also on par with the worldwide average in expecting more M&A activity globally over the next 12 months, compared with the past year (72 percent for Hong Kong; 69 percent of all).
For global activities including sourcing, distribution, production and/or outsourcing over the next twelve months, the majority of Hong Kong CFOs (63 percent) reveal that their companies plan to expand operations in China. This is in common with their counterparts globally (42 percent), among which China is the most popular destination for expanded global activity, reflecting the importance of this market for business growth. India is also of significant importance for CFOs, both in Hong Kong (34 percent) and around the world (32 percent).
The top five destinations named by those surveyed in Hong Kong for overseas expansion include:
1. China – 63 percent for Hong Kong; 42 percent of all
2. India – 34 percent for Hong Kong; 32 percent of all
3. Vietnam – 28 percent for Hong Kong; 12 percent of all
4. South Korea – 25 percent for Hong Kong; 11 percent of all
5. Indonesia – 19 percent for Hong Kong; 14 percent of all
More than half of Hong Kong finance executives (56 percent) say they are likely to spend down their cash reserves in the next twelve months. This cash will be spent on:
1. Funding ongoing operations (88 percent for Hong Kong compared to 73 percent of all);
2. Increasing capital spending (87 percent for Hong Kong; 70 percent of all)
3. Increasing spending on research and development (87 percent for Hong Kong; 69 percent of all)
Further evidence of optimism for business growth in the next year is also supported by the fact that 78 percent of Hong Kong finance executives say they plan to increase business travel spending. Hong Kong respondents are the second most likely to say they will increase spending in this category, following respondents based in China (84 percent).
Other areas of investment for Hong Kong CFOs include:
§ 44 percent for expanding market access;
§ 42 percent for new product or service development,
§ 39 percent for new production capacity.
“We’re seeing a blend of overall optimism regarding the economy off-set by short-term local concerns, translating into different planning horizons for different markets,” says Sheahan. “There’s a new normal emerging in the global marketplace where CFOs will demand value from both investments and existing processes, creating a value economy for growth.”