Business confidence across the Greater Bay Area (GBA), including Hong Kong, rebounded in the third quarter, according to the latest index jointly released by Standard Chartered and the Hong Kong Trade Development Council (HKTDC).

The latest Standard Chartered Greater Bay Area Business Confidence Index (GBAI) pointed to broad-based optimism in current performance and outlook, likely buoyed by easing external uncertainty following the extension of the US-China trade truce.

The Q3 GBAI indices rose to multi-year high levels. The "current performance" index for business activities edged up to 54.7 from 53.1 in Q2, while the "expectations" index rose to 55.7 from 52 in Q2, marking a four-year and two-year high respectively.

GBAI, noted, however, that during the survey period of early August to early September, though the U.S.' reciprocal tariffs came into effect, the U.S. extended the trade truce with China by another 90 days to November and reached multiple trade agreements with major trading partners.

"Amid the constructive dialogue between China and the U.S., the tariff uncertainty diminished and the overall external environment became relatively stable, supporting a quarter-on-quarter recovery in business sentiment," it said.

Almost all the "current performance" and "expectations" sub-indices rebounded. For "current performance', six of the eight index components saw quarter-on-quarter improvement, led by a sharp 8pts increase in "new orders" (57.5 in Q3 from 49.5 in Q2) and 4.1pts increase in "prices of finished goods/services" (58.8 in Q3 from 54.7 in Q2).

The positivism in business outlook was more noticeable with all 'expectations" sub-indices staying well above the neutral mark.

GBAI found that "Production/sales" saw the strongest rebound (+5.3pts) among the eight main sub-indices, followed by "financing scale" (+4.8pts), "fixed asset investment" (+4.2pts) and "profit" (+3.9pts).

"Across GBA cities, nearly all 'current performance' and 'expectations' rose quarter-on-quarter. In particular, Hong Kong saw the strongest rise in confidence among all cities, with the 'current performance' and 'expectations' sub-indices edging up a respective 8.3 pts and 7.3 pts to 52.2 and 53.6 in the quarter, underpinned by the continued trade frontloading and robust financial activities," said Irina Fan, director of Research, HKTDC.

Hunter Chan, economist, Greater China, Standard Chartered, said the survey findings are "in line with the positivism seen across the markets in the third quarter following the extension of U.S.-China trade truce and expectation of continued dialogue between the two countries during the survey period."

"However, the persisted trade uncertainty may hold back the business sentiment again," he added. "With increasing external uncertainties and the competition challenges in the Chinese Mainland, we believe the trend of diversification will continue."

Chan added that this is consistent with the findings that exploring overseas markets (24.5%) remains one of the strategies that GBA corporates are adopting to mitigate the potential risks.

On the other hand, there has been increasing discussion and concern on "anti-involution."

The GBAI is the first forward-looking quarterly survey in the market that looks at the business sentiment and synergistic effects in cities and industries across the GBA. It is compiled based on a survey of more than 1,000 companies in the GBA covering the manufacturing and trading, retail and wholesale, financial services, professional services and innovation and technology sectors.

The index enables investors and businesses to better understand the current business climate, gauge future performance prospects and formulate their market strategies for the GBA.

The GBA is a major economic and innovation hub in southern China, integrating Hong Kong, Macao, and nine cities in Guangdong Province—Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Zhongshan, Huizhou, Jiangmen, and Zhaoqing—into a unified region. It’s designed to rival other global bay areas like San Francisco and Tokyo in terms of connectivity, technology, and trade.