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Protests Dent Hong Kong Retail Outlook

Jul 3, 2019 5:18 AM   By Rapaport News
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RAPAPORT... Retail sales in Hong Kong are set to fall by 5% in 2019, with the decline expected to be even sharper in the luxury-goods market, which includes jewelry.

The new estimate, published last week by PricewaterhouseCoopers (PwC), is a downgrade on its previous forecast. The advisory firm had anticipated that Hong Kong’s retail sales would dip by 3%.

Reasons cited for the lower forecast include the US-China trade war and ongoing protests in the region, which have contributed to dwindling tourism from mainland China.

“The recent political and social unrest, temporary closure of the Peak Tram due to renovations, coupled with a lack of new tourist attractions might lower mainland tourists’ appetite to visit Hong Kong in the short term,” said Michael Cheng, PwC’s consumer-markets leader for Asia Pacific, Hong Kong and China. “Meanwhile, a weakening economy as well as uncertainty surrounding the trade dispute present risks to the outlook in the medium to longer run.”

PwC’s estimates mirror the retail results the Hong Kong government’s Census and Statistics Department published earlier Tuesday.

Sales for jewelry and other luxury items remained sluggish in the municipality last month, despite a boost in tourism over the Labor Day holiday period at the start of the month. While some retail categories saw modest increases, jewelry and other luxury items did not improve.

Revenue from jewelry, watches, clocks and other valuable gifts fell 2.7% year on year to HKD 6.7 billion ($858.9 million) in May, compared with the same month in 2018, according to the report. Total retail sales slipped 1.3% to HKD 39.97 billion ($5.13 billion).

Tourists from mainland China typically travel to Hong Kong to purchase luxury goods during the Labor Day holiday period, which this year ran from May 1 to 4. But while the city saw 4.7 million mainland visitors in May, a 24% year-on-year increase, this did not translate to an uplift in the sales of luxury items.

The retail performance in Hong Kong has remained subdued in recent months, and the “outlook for retail sales will likely be clouded by the still-cautious [consumer] sentiment amid an uncertain global economic environment,” a government spokesperson said.

For the first five months of 2019, retail sales of jewelry, watches, clocks and other valuable gifts decreased 4.4% year on year to HKD 34.88 billion ($4.47 billion). Overall retail sales fell 1.8% to HKD 206.1 billion ($26.44 billion).

Image: Retail stores in Hong Kong. (Another Believer)
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Tags: asia, China, Hong Kong, Labor Day, mainland china, Michael Cheng, PricewaterhouseCoopers, pwc, Rapaport News, retail
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