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Global Business Outlook Points to Sustainable Global Economic Recovery, Says HSBC Trade Confidence Index

3 May 2010

Most U.S. businesses expect trade volumes to increase but are concerned about effects of exchange rate fluctuations

U.S. businesses are growing more confident in their global trade outlook since the last half of 2009, pointing toward an expected increase in trade activity over the next six months. The latest HSBC Trade Confidence Index released today revealed that nearly three in five U.S. respondents (58%) anticipate higher trade volumes, a 17 % increase compared to six months ago.

The HSBC Trade Confidence Index,1 which surveyed more than 5,000 small and mid-market businesses (SMEs and MMEs) in 17 global markets, showed an overall positive outlook with an average global reading of 116 on a scale of 0 to 200, with 100 as a neutral reading. This is up six points from the global reading in the last half of 2009 (110). Sentiment continues to be the highest among the emerging markets with United Arab Emirates (134), India (133) and Vietnam (132) and Brazil (129), illustrating heightened confidence in their local economies' trade activity and growth. In the developed countries, U.S. businesses' confidence rose three points to 110 from 107 in the last half of 2009. All markets surveyed point toward a positive outlook except for France, which scored 95.

U.S. businesses identify emerging markets as the most promising regions for growth.  Based on responses, Latin America established itself as a popular region for trade among companies in the U.S.  The U.S. businesses looking at Latin America for growth nearly doubled from 14 % to 27 % in the last six months, surpassing Greater China (23%).

"The HSBC Trade Confidence Index consistently reveals that emerging markets in the Middle East, Asia and Latin America are leading the trade recovery and present an enormous opportunity for U.S. exporters and importers," said William Nowicki, Head of Trade and Supply Chain for HSBC North America. "Small and mid-size businesses worldwide are steadily becoming more optimistic about their global economic outlook and are confident in a sustainable rebound. However, there are still barriers to international growth. Foreign exchange volatility is one of the most commonly cited barriers followed by concerns over costs of essential services, such as shipping and storage, and trade regulation."

U.S. businesses overall are confident about their access to trade finance, with nearly 70 % anticipating that access will remain at the same level and nearly one-quarter (23%) feeling that trade finance will increase over the next six months.  The outlook remains stable on buyer default and supplier non-delivery risks, consistent with previous sentiment.

Of particular interest, U.S. companies plan to demonstrate increased control over their buyer relationships by tightening their payment terms and duration, limiting the loan or credit amount or closely monitoring debt and accounting items.

In summary, the HSBC Trade Confidence Index found a range of signs in support of a positive global trade outlook:

  • Most respondents in Latin America (64%), Middle East (63%), Greater China (63%) and India (61%) expect an increase in trade volumes in the next six months.  Globally, over half of companies (56%) including those in the U.S., the UK, Canada and Germany are optimistic about their outlook on trade volumes;
  • Global businesses are concerned about fluctuations in exchange rates (FX) and trade regulations, with Greater China businesses appearing to be the least worried about the impact of trade regulations on their business but the most concerned about FX. U.S. businesses also indicated that they are most concerned about FX (40%) and costs of essential services (39%);
  • One-third (33%) of businesses in the U.S. and Canada are bearish about the impact of exchange rates on their businesses in the next six months. Among exporters and importers in Greater China, only eight percent said that the impact of trade regulations would be unfavorable to their businesses compared to 34 % who said exchange rates may work against them;
  • The survey also suggests that intra-regional trade will continue to underpin global trade activity in the next six months. The U.S. and Canada will focus on trade amongst themselves, as will companies within Latin America and companies within Europe. Hong Kong and mainland China companies will continue to focus on Greater China trade, including Macau and Taiwan.

More details of the survey

Please see the attached report HSBC Trade Confidence Index - May 2010 for more information. The survey was conducted by research company TNS in February and March 2010. In the U.S., the sample size included 300 small and mid-size businesses with annual turnover between US $20 million to $250 million.

HSBC Trade and Supply Chain

HSBC Trade and Supply Chain is one of the largest trade services organizations in the world. Our award-winning international trade expertise combines over 140 years of extensive experience in international trade with a unique blend of local knowledge, supported by advanced technology and our extensive network of dedicated trade services offices in over 60 countries and territories worldwide.

About HSBC Bank USA, N.A.

HSBC Bank USA, National Association operates more than 475 bank branches throughout the United States.  There are over 370 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., one of the ten largest banking holding companies in the United States. HSBC Bank USA, N.A. is a member of the FDIC.

HSBC Bank USA, N.A., with total assets of $171 billion as of 31 December 2009, offers its 3.8 million plus customers a full range of banking products and services to individuals, including high net worth individuals, small businesses, corporations, institutions and governments through its personal financial services, commercial banking, private banking and global banking and markets segments.

HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from approximately 8,000 offices in 88 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,364 billion at 31 December 2009, HSBC is one of the world's largest banking and financial services organizations. HSBC is marketed worldwide as "the world's local bank."

Media Contacts

1 The first Wave of the HSBC Confidence Index covered Hong Kong, mainland China, Singapore, Australia, India, Vietnam and UAE. The UK, USA, Brazil and Malaysia were added in Wave 2. France, Germany, Canada, Indonesia, Saudi Arabia and Mexico were added in Wave 3.

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