Saudi SMEs among world's most confident - HSBC

Small and medium enterprises in the Middle East continue to top the HSBC's Small Business Confidence Monitor, with 49 percent reporting a positive economic outlook in the next six months, the bank said on Wednesday.

It also said 50 percent of regional SME firms were looking to increase capital expenditure (capex) by the end of 2010.

Including data from the UAE for the first time, the study showed a positive outlook for all Middle East countries surveyed, with Saudi Arabia second in the overall global country rankings (after Vietnam).

The Middle East region scored higher than the aggregate scores for emerging markets, developing markets and the overall global figure, for the second time.

The bi-annual HSBC Small Business Confidence Monitor gauges the outlook of SMEs on local economic growth, capital investment plans and recruitment.

The latest wave is the largest international survey of its kind covering more than 6,300 SMEs across 21 markets in Asia, the Middle East, Europe, North America and Latin America.

Saudi Arabia registered a score of 145, the highest in the Middle East and second highest in the world after Vietnam.

Business confidence among Qatar's small and medium-sized enterprises (SMEs) reduced from a high of the inaugural results of 159 in 4Q09 to 137 in 2Q10.

With a score of 120, the UAE was in line with emerging markets, while Egypt maintained its position between the global and developed markets with a score of 116.

All four Middle Eastern countries surveyed have remained in positive territory throughout 2010.

"These results demonstrate that confidence remains steady amongst SMEs in the Mena region, and I'm delighted to see the Middle East remain one of the top regions surveyed," said Simon Vaughan Johnson, head of Commercial Banking, HSBC Mena.

"Across the region, our business banking teams are reporting a return to confidence after an uncertain 2008 and 2009. The data shows that regional SMEs are increasingly looking at international trade for new markets and opportunities, with the majority of Qatari and Saudi Arabian SMEs reporting international activity.

"Increasingly, these companies are looking east for business development, with China leading the rankings as the first international market of choice for the UAE, Saudi Arabia and Qatar; and third highest market for Egyptian SMEs."

Most markets across the globe held a positive outlook, with Turkey leading at 138, followed by the Middle East (132), Greater China (121), India (121), North America (119), South-East Asia (119), Latin America (118) and UK/France (99).

Compared to the previous results in 4Q09, Turkey showed the biggest jump in confidence up 21 points, followed by North America (up 12 points) and the Middle East (up 7 points).

In terms of economic growth, 40 percent of SMEs in the UAE were still expecting the pace of the general business environment, as measured by economic growth, to increase.

Globally, over a third (34 percent) of SMEs were expecting growth to increase over the next six months, and half were expecting the current pace of growth to maintain.

The survey showed that 42 percent of UAE based SMEs are planning to increase their capital expenditure plans over the second half of the year, with a further 42 percent looking to keep it at the same levels.

A quarter of UAE SMEs said they will expand their workforce, with 69 percent planning to keep current staffing levels, and just 6 percent considering decreasing their current workforce.