RAPAPORT... Sales of jewelry and other luxury items in Hong Kong sank in August, marking the sharpest monthly
decline on record as protests in the municipality hit tourism and consumption.
Revenue from jewelry, watches, clocks and other valuable
gifts dropped 47% year on year to HKD 3.93 billion ($501.3 million) during the
month, the municipality’s Census and Statistics Department reported Wednesday. That
marks the lowest monthly decline for jewelry since the department began
publishing results in 2005, according to a public data archive. Sales across all retail categories slipped 23% to
HKD 29.36 billion ($3.74 billion).
Demonstrations against an extradition bill have been escalating since June, forcing luxury stores, train stations and the city’s airport to shut down.
Although the bill has been scrapped, unrest has continued, with police reportedly shooting
an 18-year-old protester Tuesday, and more than 100 people, including 30
police officers, being hospitalized amid the
increased violence.
The situation has led to a sharp decline in travelers from
China and abroad, as well as weakened local purchasing. The number of tourists
visiting Hong Kong was down 39% to 3.6 million in August, the Hong Kong Tourism
Board reported. Of those, 2.8 million came from mainland China, a decline of
42% over the same period last year.
The overall retail decline was “even worse than that recorded in September
1998 during the Asian financial crisis,” a government spokesperson noted.
“Apart from the weak consumer sentiment amid subdued economic conditions, the
plunge in August mainly reflected the severe disruptions to inbound tourism and
consumption-related activities caused by the local social incidents.”
The government expects weakness in the market to continue as
conditions persist, it explained.
“Retail sales will likely remain in the doldrums in the near
term, as the worsened economic outlook and local protests involving violence
continue to weigh on consumer sentiment and inbound tourism,” the spokesperson
added.
Swiss bank UBS also expects a continued decline in the market, noting a more challenging outlook for hard luxury, which
includes jewelry and watches, versus soft luxury, comprising bags, leather and
clothing.
“This is particularly prevalent in the Chinese market, with
hard luxury more exposed to recent [yuan] depreciation and protests in Hong
Kong,” the bank explained. “Because of their long-term availability and high
price tag, these are less likely to benefit from repatriation of demand in case
of short-term disruptions in Hong Kong. Note that 50% of Chinese diamond
jewelry was purchased in Hong Kong in 2018, [so] the near-term disruptions
to sales [are] likely to be significant.”
In the first eight months of the year, retail sales of
jewelry, watches, clocks and other valuable gifts decreased 14% to HKD 50.06
billion ($6.38 billion). Sales in all retail categories for the January-to-July
period fell 6% to HKD 305.05 billion ($38.9 billion).
Image: Police throwing tear gas at protestors in Hong Kong on September 29. (Shutterstock)
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