Retail sales in Hong Kong see highest growth in over two years thanks to local consumption
Good economic news comes despite declining visitor numbers, including from mainland
A stock market boom and rising property prices in July prompted Hong Kong retail sales to grow at their fastest rate in more than two years, potentially spelling the end of a years-long downturn.
July sales jumped 4 per cent compared with the same period last year, significantly higher than the 0.1 per cent growth in the previous month, government statistics revealed on Tuesday.
Industry insiders attributed the stronger-than-expected growth to robust local consumption and improved inbound tourism, and expected the trend to continue in the second half of the year with support of a stable labour market.
“We are overjoyed at the July figure. The growth is much better than we have expected,” Thomson Cheng Wai-hung, chairman at Retail Management Association said on Tuesday.
He expected the full-year growth to hit 1 per cent, despite the 0.6 per cent decline in the first half.
This would put an end to a two-year contraction of the city’s once-booming industry, as big-spending mainland shoppers flew elsewhere to buy luxuries.
Retail sales in the city dropped for 25 consecutive months until a mild rebound in March.
Cheng said local consumers were a main driver for the upbeat figure, as they felt more comfortable spending money on big-tickets items, with their wealth boosted by the rising value of stocks and properties.
Hong Kong’s residential property prices hit a record high in June when home prices jumped 21.6 per cent on a yearly basis, according to the Rating and Valuation Department’s data.
The Hang Seng Index also added more than 1,500 points in July, surpassing the 27,000 benchmark, the highest in almost two years.
The “wealth effect” helped a strong recovery in the category of luxuries in July, with sales of jewellery, watches and clocks, and valuable gifts increasing 12.9 per cent, the biggest in almost four years.
Cheng, a veteran in the luxury industry, said there has been a moderate recovery since the end of last year. The international price alignment strategy which saw brands such as Chanel and Burberry lower prices in Hong Kong encouraged local consumption, he added.
Celebration events for the 20th anniversary of Hong Kong’s return to Chinese rule in that month should also have attracted more tourists to the city, Cheng said.
“Most our members are very positive [on the sales performance] for the rest of the year,” he said, as overall economy showed a strong momentum.
Hong Kong retail sales slip in January despite rise in mainland visitors and Lunar New Year expectations
The Hong Kong government upgraded the city’s full-year economic growth target by 1 percentage point to 3 to 4 per cent earlier this month, after it grew 3.8 per cent in second quarter on back of strong stock and property markets and improved global environment.
“Looking ahead, local consumer sentiment should remain positive with favourable job and income conditions,” a government spokesman said.