Relaxed travel rules spark rally in shares of HK retailers
The share prices of Hong Kong retailers surged yesterday on expectations that eased regulations for mainlanders visiting the city would bring more shoppers from across the border.
Cosmetics retailers, department store operators, and high-end jewellery and watch sellers, which may benefit from the new policy, rose up to 7 per cent despite a 0.41 per cent fall in the Hang Seng Index.
The central government announced last week that non-local residents working or studying in Shenzhen, Shanghai, Beijing, Tianjin, Chongqing and Guangzhou could apply for travel permits to Hong Kong and abroad without having to go back to their hometowns.
The Shenzhen authorities said on Friday that multiple-entry permits to Hong Kong and Macau would be available to four million residents in the border city who did not hold household registration documents.
"This is definitely good news for retailers in Hong Kong," said Eugene Mak, an analyst at Core Pacific-Yamaichi Securities. "But I think the market has overreacted a bit. Most non-local people in these cities are migrant workers and their spending power is limited."
Shares of Sa Sa International Holdings rose 6.7 per cent to close at HK$5.01 after the cosmetics chain said retail sales grew 21 per cent in the quarter to August.
Bonjour Holdings, its main rival in the city, increased 6.1 per cent to HK$1.05.
Emperor Watch & Jewellery rose 3.8 per cent, Luk Fook Holdings gained 1.4 per cent and Lifestyle International Holdings, the operator of Sogo department stores, edged up 0.24 per cent.
Retail sales growth in Hong Kong has slowed this year as mainland tourists kept a tight hold on their purses.
Government figures showed retail sales rose 13.1 per cent in the first half of this year, compared with 24.4 per cent in the same period last year.
The Hong Kong Retail Management Association said the sectors that relied heavily on mainland tourists had seen fewer shoppers from across the border and their spending had also dropped significantly.