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Majority of Small Businesses Surveyed Worldwide Hold a Positive Business Outlook

2 February 2010

Emerging Markets Small Business Confidence Leads Developed Countries

U.S. Surveyed for First Time Trails in Semi-Annual HSBC Small Business Confidence Survey

New York, NY - A growing proportion of small businesses worldwide are bullish on the first half of 2010 and, for the first time since the financial crisis, many are signaling strong local economic growth and an increase in capital investment and recruitment plans. Still, business confidence among U.S. small businesses surveyed trails the sentiment of small businesses in emerging markets.

The semi-annual HSBC Small Business Confidence Monitor gauges the six-month outlook of small businesses on local economic growth, capital investment plans and recruitment. This fifth wave of the survey is the largest to date, capturing the views of more than 6,000 small businesses across 20 markets. In addition to gauging the views of small businesses in Asia, the Middle East, Europe, and Latin America, the most recent Small Business Confidence Monitor also surveyed small businesses in the U.S. for the first time. 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.

Mark Luppi, Executive Vice President and Head of Business Banking for HSBC - North America, said: "The small business sector is a key indicator of the overall health and competitiveness of local economies and our Small Business Confidence Monitor allows us to gauge the sentiment of this critical group. While the findings reveal that confidence levels are relatively positive in the U.S., they do lag behind the levels seen in the emerging markets surveyed. The news overall is encouraging with the majority of U.S. small businesses expecting capital expenditure and recruitment plans to remain relatively stable or increase slightly versus the reductions we have seen in the past."

Globally, the small business indices tracked by HSBC in most countries and territories hold a positive outlook, with the Middle East at 125, Latin America at 118, Canada at 116, the U.S. at 106, and the U.K. at 101. France is just below neutral at 94. But emerging markets' small businesses in Asia, the Middle East, Latin America, and Eastern Europe have a significantly higher level of business confidence than their counterparts in the developed markets with an index of 121 versus 106.

Business confidence graph

In summary, the HSBC Small Business Confidence Monitor found an overall positive outlook in terms of growth, capital expenditure and recruitment among U.S. small businesses, but less immediate plans to conduct business internationally.

  • Four in five (80%) U.S. small businesses anticipate their local economic growth will be maintained or increase in the next six months.
  • U.S. small businesses anticipate similar momentum with regard to capital expenditure plans. The large majority (61%) of those surveyed expects capital expenditure to remain at the same level, and another quarter (24%) expects growth in capital expenditure in the next six months.
  • While fewer than five percent of U.S. small businesses anticipate further decreases in recruitment in the next six months, the percentage of U.S. small businesses planning increases in recruitment also remains relatively low, with the overwhelming majority (85%) of those surveyed expecting their activities in this area to remain unchanged.
  • Thirty percent of small businesses in Latin America and 22 percent of small businesses in Greater China selected the U.S. as a top market for their international activity.
  • With regard to international business, three-quarters (75%) of U.S. small businesses surveyed continue to operate domestically with no intention of conducting business internationally.
  • Small businesses also revealed a number of barriers to their companies' ability to trade or do business internationally. Nearly half (47%) of U.S. small businesses identified lack of knowledge or contacts in overseas markets as their greatest hindrance, followed by lack of demand for their products (40%). Close to a third of U.S. small businesses (36%) stated that government regulations and the cost of essential services like shipping, logistics and storage were substantial obstacles.

Adds Luppi: "While larger U.S. businesses are increasingly looking to do business in emerging markets, the U.S. remains still a traditionally domestic market in terms of small businesses. The findings of the Small Business Confidence Monitor reveal that there is a great opportunity available for U.S. small businesses to increase their revenues by targeting international markets that are showing positive momentum. HSBC's products and services can help businesses overcome many of the barriers they currently face or perceive in pursuing international business."

Summarizing the global findings, Derrick Ragland, HSBC Global Head of Business Banking, said: "There is a rebalancing of the world economy, and emerging markets are becoming more and more important as a driver of growth. Small businesses are at the heart of this growth, driving local job creation, investment and productivity. And as they grow and develop and look to world markets for new opportunities, HSBC is uniquely placed, with its international connectively and its on-the-ground expertise, to help small business unlock its global potential."

More details of the survey

The survey was conducted by research company TNS in October and November 2009. In the U.S., the sample size included 300 small businesses with annual turnover less than US $20 million. For more information on the Global Small Business Confidence Monitor - February 2010, please contact Juanita Gutiérrez.

Notes to editors:

About HSBC Bank USA, N.A.

HSBC Bank USA, National Association operates more than 470 bank branches throughout the United States. There are over 375 in New York state as well as branches in Connecticut, Washington, D.C., Florida, New Jersey, Pennsylvania, Maryland, Virginia, California, Delaware, Illinois, Oregon and Washington State.  HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA Inc., an indirect, wholly-owned subsidiary of HSBC North America Holdings Inc. HSBC USA Inc. is one of the nation's largest bank holding companies by assets.  HSBC Bank USA, N.A. is a member of the FDIC.

HSBC Bank USA, N.A., with total assets of $250.8 billion as of 30 September 2009, offers its four million plus retail customers access to global markets and services. The bank provides a full-range of banking products and services to individuals, corporations, small businesses, institutions and governments through its personal financial services, commercial banking, private banking and global banking and markets segments.

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Media Contacts

1: Emerging markets include Hong Kong, India, Indonesia, mainland China, Malaysia, Singapore, Taiwan, Vietnam, Egypt, Qatar, Saudi Arabia, Turkey, Argentina, Brazil, Panama, and Mexico

2: Developed markets include the U.S., Canada, U.K., and France.

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