By Chen Huifen

SINGAPORE small- and medium-sized enterprises (SMEs) recorded the biggest jump in confidence level among their Asian peers in the second quarter this year, posting a 19-point increase in a business confidence index created by HSBC.

In the latest findings of the HSBC Small Business Confidence Monitor, the index for Singapore rose to 136 in Q2 this year, from 117 in Q4 last year. This made Singapore the country with the second highest level of business confidence, behind Vietnam which registered an index of 164.

At 123 and 121 points respectively, China and India posted the third- and fourth-highest business confidence levels in Asia. However, they were a slice off the 124 and 132 points registered two quarters ago.

HSBC noted that for the first time since the global financial crisis, all Asian markets posted an index above the neutral level of 100 points.

'Emerging nations are conducting more trade with each other and reducing their exposure to the weakening Western economy, and investors are finding emerging markets more attractive given the low return on Western assets,' explained HSBC Singapore head of commercial banking Tan Siew Meng. 'While these are growth factors for Asia, future risks such as those stemming from inflationary pressures will have to be navigated given that cooling measures have been introduced by certain governments in Asia.'

The proportion of Singapore SMEs expecting economic growth has also increased to 57 per cent, from 39 per cent who said so six months earlier. At the same time, 42 per cent plan to increase their capital expenditures, up from 30 per cent who said so in Q4 last year.

Of the 300 Singapore SMEs polled, 23 per cent have plans to hire, up from 17 per cent who indicated so previously. Those planning to reduce staff remain unchanged at 2 per cent.

The Singapore findings were extracted from a global study by HSBC that surveyed more than 6,300 SMEs in 21 markets between May and June this year. The SMEs polled in Singapore had annual revenue of under US$30 million.

The global business confidence index, which takes into account all markets studied, registered an increase of seven points to 118 in Q2. Outside Asia, SMEs in Turkey were the most optimistic, posting a 21-point increase in the index to 138. SMEs in the UK and France, however, remained pessimistic with an index of 99, from 97 earlier.

This article was first published in The Business Times.