Core Insights - The Standard Chartered Hong Kong SME Leading Business Index rebounded to its highest level of 44.5 in Q4 2025 after dropping to a 13-quarter low of 40.5 in Q3 2025, primarily driven by a significant recovery in the "Global Economy" sub-index, which increased by 12.0 points [1] - The overall business confidence among SMEs has shown a notable recovery, with all five sub-indices rising, particularly the "Global Economy" sub-index, which recorded a strong rebound to 32.6 [1][2] - Despite the positive trends, short-term challenges remain, as "Business Conditions" and "Profit Performance" indices are still around the low 40s, indicating ongoing concerns [1] Industry Performance - Among the 11 industries surveyed, all except the "Construction" sector saw increases, with significant gains in the "Real Estate," "Finance and Insurance," "Transportation, Warehousing and Courier Services," and "Retail" sectors [2] - 46% of SMEs expect raw material costs to rise, a slight decrease from the previous quarter, indicating a slowdown in cost increase expectations [2] - 95% of SMEs plan to maintain or increase their investments this quarter, up by 3 percentage points from the last quarter, with 6% indicating they will increase their investment amounts [2] Trade and Market Outlook - The "Import and Export Trade and Wholesale" and "Transportation, Warehousing and Courier Services" sectors ranked lower in the industry index, reflecting ongoing uncertainties in trade relations, particularly between the US and China [2] - The cautious approach taken by both the UK and China is expected to have a positive impact on SMEs, as communication between the two parties continues [2][3] - Companies are likely to pursue overseas expansion to mitigate risks associated with unstable tariffs, supported by government funding to assist SMEs in entering international markets [3]