The UK-invested bank in its first-ever Trade Confidence Index survey aimed to find out expectation of small and medium enterprises on cross-border trade prospect in the next three months. The survey was conducted in March by HSBC’s Trade and Supply Chain Division and market researcher TNS, and wrapped up in late May.

Joining the survey were 300 small and medium enterprises with annual revenue of less than US$10 million each, while questions were also sent to enterprise leaders in six other markets, namely Australia, Hong Kong, India, mainland China, Singapore, and the United Arab Emirates (UAE), which are key markets of HSBC in trade financing.

Upon the question whether foreign exchange rate would positively or negatively impact their business, 64% of respondents in Vietnam expected the forex rate to adversely impact their trade businesses in the next three months, while the ratio was 32% in Singapore and 30% in Hong Kong. Meanwhile, 48% of respondents in India and 39% in UAE expected to benefit from exchange rates.

Fluctuating exchange rates were also rated as one of the top barriers to trade in the survey as mentioned by 62% of Vietnamese respondents, while the ratio was 54% in Hong Kong, and 52% in India. In comparison, falling product demand was the top challenge for trade growth cited in Australia with 62%, Singapore 48%, and mainland China 43%.

For the next three months, the majority of respondents across Asia expect no change in the level of risk they face from buyers defaulting on their payments or from suppliers not honouring their trade agreements. The biggest proportions of respondents that believe the level of risk will remain the same were from Vietnam and China with 72%.

When asked what they would do to cover themselves against non-payment risks, up to 57% of enterprises in Vietnam said they would flexibly change payment clauses in the contracts, much different from other countries which mostly cited greater use of trade finance through their banks as the top strategy. Up to 43% of enterprises in Vietnam chose trade finance from banks to mitigate non-payment risks.

Along with developing markets like China and India, Vietnam enterprises hold a more confident view on the global economy than the more developed markets of Australia, Singapore, and Hong Kong. Vietnam’s respondents hold an optimistic view towards the outlook for cross-border trade over the next three months as more than half of surveyed companies expected an increase in trade volumes, the highest proportion from the countries surveyed.

In line with their bullish outlook on trade, Vietnam had the largest portion of 57% of respondents within markets surveyed which said that they would need more trade finance in the next three months, followed by India with 53%.

Nguyen Thanh Ha, head of Trade and Supply Chain of HSBC Vietnam, said in a press meeting on Wednesday that the survey would help the bank to understand more about enterprises engaging in import and export in Vietnam. Furthermore, HSBC can design products and services meeting demand of enterprises such as consulting carefully on the forex rate risks when meeting enterprises, Ha said. She also said HSBC expected to carry out such a survey every six months.

HSBC Vietnam now has 1,000 corporate customers having import export activities and their loans account for half of the bank’s outstanding loans.