Investment sentiment among small and medium-sized enterprises in Hong Kong has generally not been affected by high interest rates, with 92 percent of surveyed firms planning to maintain or increase their overall investments this quarter, which is on a par with the previous quarter, according to a recent survey.

Although more than half of respondents said the high interest rate environment has led to the decline of customers' purchasing power, many of them have held steady on investment, the survey found, which was published by the Hong Kong Productivity Council on Tuesday.

Enterprises are most willing to invest in research and development, followed by training related to e-commerce or digital technology, as well as overall staff training.

Nearly 30 percent of surveyed SMEs in Hong Kong said their supply chain management has been negatively impacted by the high interest rate environment, as they need to find suppliers that offer lower prices and cut inventories to trim costs.

The tightened monetary environment has also resulted in customers delaying payments, declining sales and rising costs of existing debt, thus deteriorating business cash flow.

With rising lending rates, tightening lending conditions and lower credit limits, 18 percent of respondents reported they have faced difficulties in borrowing or obtaining new funding.

Against such a backdrop, SMEs in the city have been actively making changes. While 29 percent of SMEs indicated their plans for coping with the situation by adjusting product and service pricing over the next six months, 23 percent said they would cut costs and 22 percent planned to diversify supply sources.

Over the longer term, enhancing risk management to address economic volatility is expected to be a strategy adopted by 26 percent of SMEs, followed by reinventing business models and increasing financial reserves.

"Despite the uncertain market environment, overall demand remains strong," said Lawrence Cheung, chief innovation officer of the HKPC.

"Coupled with Hong Kong's international business environment and the unique advantages of high flexibility for SMEs — along with all-round support from the Hong Kong Special Administrative Region government in funding and technology — there is potential for new breakthroughs in business."

Meanwhile, Standard Chartered Hong Kong SME Leading Business Index, which was also released by the HKPC on Tuesday, found that business confidence among Hong Kong's SMEs has dropped, with the overall index for the third quarter retreating by 4.8 points to 42.5, the lowest level in two years.

While a level above 50 indicates a positive outlook, a reading below 50 reflects the opposite.

All the five subindices posted a decline, with "global economy", "profit margins" and "business conditions" showing a significant drop, by 9.9, 8.3 and 8.0, respectively.