<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Local SMEs 'gloomier than regional peers'
</TR><!-- headline one : end --><TR>Survey finds them less confident about trade prospects in near term </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Yang Huiwen
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Singapore SMEs cite sluggish demand and currency fluctuations as the main barriers to trade growth in the near term, according to the HSBC Trade Confidence Index. -- ST FILE PHOTO
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SMALL and medium-sized enterprises (SMEs) are a little more gloomy about near-term trade prospects compared with their peers across the region, a new survey has found.
The findings form part of the HSBC Trade Confidence Index, the first survey of its kind which tracks the sentiment and expectations of SMEs over the next three months.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
TRADE CONFERENCE INDEX
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</TD></TR></TBODY></TABLE>The survey was conducted in April and May, and asked 2,100 SMEs, including importers, exporters and traders, across seven markets about their near-term outlook on trade volume, risks and trade finance, among other things.
The results were used to calculate an index ranging from zero - the lowest confidence level - to 200. The 100 level represents a neutral view.
Singapore scored 99.9 points - just below neutral. Hong Kong was the most bearish, with a score of 93.1, while the United Arab Emirates, India and China were among the most optimistic with scores above 110.
Sluggish demand and currency fluctuations were cited by Singapore firms as the main barriers to trade growth in the near term.
'Exporters and importers in the more mature markets appear to be feeling the impact of the economic slowdown more than their counterparts in the newer exporting economies because of their closer links to the global economy,' said MrJonathan Speight, head of trade and supply chain at HSBC Singapore.
'Singapore, as a small, open economy, is heavily reliant on trade and is therefore vulnerable to external shocks,' he said.
The dire state of the global economy has placed risk management high on the agenda of these SMEs, said Ms Tan Siew Meng, HSBC's head of commercial banking here.
'The concept of risk is clearly much more heightened these days,' she said.
Hedging is one of the solutions adopted by these SMEs 'to mitigate unfavourable movements in exchange rates and maintain profitability', she said.
For some traders, profit margins can be as thin as about 3 per cent to 5 per cent so any adverse fluctuations in exchange rates can easily wipe out these margins, she said.
SMEs here told the pollsters they were also concerned about rising counter-party risks, such as buyers not paying up and suppliers failing to deliver goods.
About 27 per cent of the Singapore SMEs surveyed expect the risk of buyers defaulting on payment to rise over the next three months, compared with 9 per cent who expect this risk to reduce.
The risk of suppliers not honouring trade arrangements is also a bigger concern for about 11 per cent of the respondents, compared with 6 per cent who expect this risk to reduce.
The more popular strategies adopted by SMEs to mitigate counter-party risks include turning to traditional trade finance instruments as well as requesting advance payment from buyers before delivering goods.
Ms Tan said traditional trade finance solutions are making a comeback due to the increased security they provide to buyers and sellers.
The survey also found that Singapore's trade-oriented SMEs are less reliant on banks than their peers in the other countries surveyed.
About 41 per cent of Singapore firms say self-funding will be the main channel for their future trade financing needs while 39 per cent of firms say they will be looking to banks.
By contrast, more than 50 per cent of SMEs in China, Hong Kong and Vietnam see themselves depending mainly on banks to provide financing. [email protected]
</TR><!-- headline one : end --><TR>Survey finds them less confident about trade prospects in near term </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Yang Huiwen
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
Singapore SMEs cite sluggish demand and currency fluctuations as the main barriers to trade growth in the near term, according to the HSBC Trade Confidence Index. -- ST FILE PHOTO
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SMALL and medium-sized enterprises (SMEs) are a little more gloomy about near-term trade prospects compared with their peers across the region, a new survey has found.
The findings form part of the HSBC Trade Confidence Index, the first survey of its kind which tracks the sentiment and expectations of SMEs over the next three months.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>The survey was conducted in April and May, and asked 2,100 SMEs, including importers, exporters and traders, across seven markets about their near-term outlook on trade volume, risks and trade finance, among other things.
The results were used to calculate an index ranging from zero - the lowest confidence level - to 200. The 100 level represents a neutral view.
Singapore scored 99.9 points - just below neutral. Hong Kong was the most bearish, with a score of 93.1, while the United Arab Emirates, India and China were among the most optimistic with scores above 110.
Sluggish demand and currency fluctuations were cited by Singapore firms as the main barriers to trade growth in the near term.
'Exporters and importers in the more mature markets appear to be feeling the impact of the economic slowdown more than their counterparts in the newer exporting economies because of their closer links to the global economy,' said MrJonathan Speight, head of trade and supply chain at HSBC Singapore.
'Singapore, as a small, open economy, is heavily reliant on trade and is therefore vulnerable to external shocks,' he said.
The dire state of the global economy has placed risk management high on the agenda of these SMEs, said Ms Tan Siew Meng, HSBC's head of commercial banking here.
'The concept of risk is clearly much more heightened these days,' she said.
Hedging is one of the solutions adopted by these SMEs 'to mitigate unfavourable movements in exchange rates and maintain profitability', she said.
For some traders, profit margins can be as thin as about 3 per cent to 5 per cent so any adverse fluctuations in exchange rates can easily wipe out these margins, she said.
SMEs here told the pollsters they were also concerned about rising counter-party risks, such as buyers not paying up and suppliers failing to deliver goods.
About 27 per cent of the Singapore SMEs surveyed expect the risk of buyers defaulting on payment to rise over the next three months, compared with 9 per cent who expect this risk to reduce.
The risk of suppliers not honouring trade arrangements is also a bigger concern for about 11 per cent of the respondents, compared with 6 per cent who expect this risk to reduce.
The more popular strategies adopted by SMEs to mitigate counter-party risks include turning to traditional trade finance instruments as well as requesting advance payment from buyers before delivering goods.
Ms Tan said traditional trade finance solutions are making a comeback due to the increased security they provide to buyers and sellers.
The survey also found that Singapore's trade-oriented SMEs are less reliant on banks than their peers in the other countries surveyed.
About 41 per cent of Singapore firms say self-funding will be the main channel for their future trade financing needs while 39 per cent of firms say they will be looking to banks.
By contrast, more than 50 per cent of SMEs in China, Hong Kong and Vietnam see themselves depending mainly on banks to provide financing. [email protected]
