Consumer Behaviour

Mainland, HK consumers upbeat on promise of more stimulus by Beijing

PUBLISHED : Wednesday, 22 August, 2012, 12:00am
UPDATED : Wednesday, 22 August, 2012, 10:01am

Despite weak economic data, mainland and Hong Kong consumers are slowly recovering their confidence, amid expectations the new Communist Party leadership will take steps later this year to boost domestic consumption.

A global survey released this month by MasterCard found that the biggest improvement in sentiment in 14 Asian economies was in Hong Kong, where the survey rating rose to 51.8 on a scale of 100 in the first half of this year, up from 29.9 in the second half of last year. This was the first rebound in the rating since early 2010.

The mainland's consumer confidence rating rose to 77.4 during the first six months from 64.8 in the previous six months. A rating of 50 and above represents positive sentiment.

The mainland's industrial output growth - an important barometer of gross domestic product - cooled the most in more than three years to 9.2 per cent last month, while retail sales growth slowed to 13.1 per cent in July from 13.7 per cent in June in nominal terms.

Inflation continued to fall to a 21/2-year low in July.

The data signalled the likelihood of further easing measures from the central government, which the market has long been expecting.

The Economic Information Daily - a mainland newspaper operated by Xinhuanet.com - reported yesterday that the ministries of commerce and information technology were now consulting stakeholders over a number of easing proposals, focusing on the retail sector, that Beijing plans to launch after the new administration takes control in October.

In Hong Kong, retailers of luxury products and jewellery have complained of persistent weak sales in August. But the Hong Kong Retail Management Association said the indications of resurgent appetite among the mainland's big spenders would be good news to local retailers.

"It was never really about mainland consumers' actual consumption power, but whether they were willing to spend amid economic uncertainties," said association chairwoman Caroline Mak Sui-king. "Although the Chinese government plans to capture most of the country's retail power, a rebound in the mainland's economy will still benefit neighbouring cities."

Hong Kong retail sales data for June took the market by surprise as it showed a rebound in spending to double-digit year-on-year growth of 11 per cent from 8.8 per cent in May. Sales of food and apparel rebounded to grow by between 7.3 per cent and 11.6 per cent in June, although the sales value of watches and jewellery - which previously recorded growth rates of up to 30 per cent - was up just 3.1 per cent in June.

MasterCard, which conducts the consumer confidence survey two times a year, polled 11,376 respondents across 25 economies between April and June. Fourteen of the economies were within the Asia Pacific region.