Trade Spat Hits Small, Medium Business Confidence

The Productivity Council said on Thursday that confidence among small and medium-sized enterprises in the business environment has dropped to a three-year low, amid concerns over US-China trade tensions.

The council's latest index of SME confidence for the third quarter has plummeted to 39 points, compared to 46 points in the second quarter.

All its sub-indices, such as confidence in global economy and investment sentiment, recorded a fall.

The council said the latest data is yet to reflect whether business sentiment has been affected by the ongoing anti-extradition protests.

But senior economist Kelvin Lau from Standard Chartered, which sponsored the survey, said it may be too early to know.

"It is still too early to gauge the extent of potential damage or impact on the economy itself just based on for example, retail sales numbers. Those have not been particularly different from, say the performance before June," he said.

But Lau said the situation might not be entirely comparable to that during the 2014 Occupy protests, as the impact of the macro economic environment was much less evident then.

The economist said the China-US trade spat and the slowing down of the mainland economy have been the decisive factors so far as local businesses are more exposed to them.