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  • Dec 20, 2014
  • Updated: 5:50pm
NewsHong Kong
ECONOMY

Slide in Hong Kong’s retail sales continues in June with 6.9pc drop

Mainland corruption crackdown blamed for falling demand at Hong Kong's high-end shops

PUBLISHED : Thursday, 31 July, 2014, 11:36pm
UPDATED : Friday, 01 August, 2014, 8:27am
 

The grim performance of Hong Kong's retail sales continued in June, producing the worst first-half showing since 2009.

The government's monthly statistics released yesterday showed that sales revenue declined in June for the fifth month in a row, dragged down by a continued plunge in demand for luxury goods.

An economist said he expected the woes in the sector to continue amid President Xi Jinping's anti-graft drive on the mainland.

Total retail sales in June decreased by 6.9 per cent year on year to HK$37.1 billion. That was a larger decline than in May, when sales dropped 3.9 per cent from a year ago.

The value of sales of jewellery, timepieces and valuable gifts decreased 28.2 per cent in June from the same period last year. Sales of commodities in department stores dropped 3.6 per cent from a year ago.

Retail sales experienced their worst month in April when sales of luxury goods dropped almost 40 per cent year on year, a fall attritubet to sluggish spending by mainlanders.

Tim Condon, ING Asia chief economist for Asia, said he expected the collapse of luxury sales to continue in view of Xi's anti-corruption drive and the announcement this week that former security chief Zhou Yongkang was under investigation for corruption.

Condon said the slide would not go on indefinitely, but that the market could not be expected to stabilise before the end of this year.

For the first six months as a whole, retail sales decreased 1.3 per cent - the worst first-half performance since 2009, during the global financial crisis.

The Hong Kong Retail Management Association attributed the "below expectation" sales to unstable weather, sluggish growth in mainland visits and spending, and the World Cup in Brazil distracting people from their shopping.

Bank of East Asia chief economist Paul Tang Sai-on said the drop in department store sales on top of jewellery sales indicated a general weakening in the purchasing power of tourists.

Industry groups and analysts maintain a cautious outlook.

The retail association predicted sales remaining soft in July and single-digit growth for the summer.

Tang expected a decrease or single-digit growth for July and August.

 

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virokick
Great news , great news for HK grassroots.
Jewellers down = HK rent down= HK people happy.
Sasa out = noodle shops in = HK people happy.
LV , Prada down= mainlanders down
Mainlanders down= over crowding down
Mainlanders down = HK happy.
oxymoron13
What a Feast for the Eyes and Music to the Ears ! Keep up the landslide and pretty soon the lack of demand would drive all rental prices down and there will be less eyesores from seeing gold and leather, more necessity stores back in the neighborhood. Less sound of baggage trolley, less bursts of shouts, cleaner streets, more breathing space, no more social unrest and law and order restored !
mcheung
Very Good News Indeed!! Sales of luxury goods and cosmetics doesn't really benefit the local economy that much, other than going into the pockets of greedy landlords and overseas manufacturers. Hopefully this plunge in sales will bring down the rents so local entrepreneurs can afford to start their own business.
caractacus
This may help to drive down the rents of greedy landlords who want to grab all the retailers' profits, but if the retailer goes bust, they don't care because there is always another poor sucker who will pay the rent - until he or she goes bust. It is a very sick system where property prices bear no relation to people's incomes. HK has always been like this, but never to such an extreme degree.
The unhealthy relationship between unelected, unaccountable government and entrenched, corrupt, crony capitalist, vested business interests are at the heart of this, distorting the economy more than ever, at the expense of the middle and lower income people.
Dao-Phooy
Bubble's burst for the luxury goods market - over expansion to the point of saturation. No crocodile tears for them or the avaricious landlords.
53a3ea90-7c10-4664-a880-4c4b0a320968
That 's the curse of such a catastrophe the retail sector experiencing. The government and tycoons have no one to blame but their stupid minds.
lucifer
Uh Oh....did we forget to plan for a slowdown?
I don't think its due only because of the corruption crackdown in the Mainland. More likely, the broader Mainland economy, or should I say the "pyramid scheme" is running out of steam.
HK-Explorer
Unemployment is way to low and too many young people were drawn into luxury sales and property sales which added very little value to the HK economy / quality of life. Having a slowdown in one sector while other sectors are hot will buffer the impact and allow a redo of the labor force to move the human resources where they can be better used.
Also less crowded streets and shops would be nice to see in Hong Kong. Was getting tiring to go into the city on weekends with packed streets and packed restaurants. Most people I know where starting to stay away. Maybe now HK people can better enjoy HK.
recanter
Hong Kong will be fine. Strong financial center, tax haven and the rule of common law will guarantee the money keeps flowing.
sipsip1238
That applies only to the extent that the haves actually bother to re-distribute their incomes to the have-nots, unfortunately, in a city like Hong Kong where even the half-haves act like bottom-holes like you, the have-nots just keeps getting crushed and forgotten.
It'd be good for a change if the rent falls a little and small business owners actually get another chance.

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