Chow Tai Fook expects pickup in second half

Chow Tai Fook Jewellery Group is upbeat on the second half of the year, when it expects gold prices and jewellery demand on the mainland to stabilise.

The volume of gold sales will drop as bullion prices normalise but the firm should see revenue growth, said chairman Henry Cheng Kar-shun at the firm's annual general meeting yesterday. Rents were also stabilising and should not have too big an impact on business in the months to come, Cheng said.

The world's biggest jewellery retailer by market value sells a broad range from mass luxury items to high-end jewellery, gold products and watches in Hong Kong, the mainland, Macau, Singapore and Malaysia.

In July, Chow Tai Fook found itself under the media's glare over charges of gold price fixing in Shanghai. It issued a statement denying any involvement. Five of its peers were eventually fined 10.1 million yuan (HK$12.6 million) for manipulating the retail prices of bullion and platinum jewellery in a scheme led by the Shanghai Gold & Jewellery Trade Association.

Hong Kong's gold, watch and jewellery segment as a whole saw a steep drop in sales growth from the 42.6 per cent in June to 28.2 per cent in July, figures from the Hong Kong Retail Management Association show. The association said the city's gold and jewellery vendors were among the few retailers still enjoying double-digit sales growth.

"The outlook for the second half may not be bad. [But] if [the growth rate in] August is poor, say around 7 to 8 per cent growth, then we will need to be worried about the rest of the year. Sales in Hong Kong usually take place in November, so if we see sales in October, it means the inventory is high and business is not good," HKRMA chairman Caroline Mak Sui-king said.