Shopping mall owners take a drubbing in the stock market as Hong Kong protests damage confidence in retail sector
- Swire Properties and Wharf Reic’s shares have declined the most since the huge rally on June 9 that kickstarted what has now been weeks of demonstrations punctuated by violent clashes with police
Shopping mall owners have become victims of the mass rallies in Hong Kong, with their share prices taking a battering as investors lose faith in the city’s retail market.
Among 18 major listed developers and commercial landlords, Swire Properties and Wharf Reic’s share prices have declined the most since the huge rally on June 9 that kickstarted what has now been weeks of demonstrations punctuated by violent clashes with police.
Swire dropped 8.1 per cent to close at HK$30.75 on Wednesday, while Wharf Reic slumped by 7.1 per cent to close at HK$50.35.
“The protests have lasted for more than a month, and investors are seeing how they have got more serious. The market is a little worried about retail sales because the protests may affect the number of mainland visitors coming,” said Raymond Cheng, head of Hong Kong and China research and property at CGS-CIMB Securities.
“Even foreign governments have warned Hong Kong may not be a safe city to visit amid the rallies. Investors immediately think the direct impact of the protests is on the retail sales and [foot] traffic in shopping malls.”
Cheng warned that if the protests were to last a long time, it would affect attitudes towards the business environment, the office market and the outlook for residential prices.
Wharf Reic declined to comment on its share-price performance.
It owns numerous high-end shopping centres including Causeway Bay’s iconic Times Square and Tsim Sha Tsui’s Harbour City.
Swire Properties, which operates Pacific Place in Admiralty, declined to comment on the share-price movement. A spokeswoman said: “Over the last few weeks, there have been intermittent disruptions which have affected operations at Pacific Place Mall. However, we were able to resume normal operations shortly afterwards.”
Meanwhile, shares in Sun Hung Kai Properties, whose Yoho Mall and New Town Plaza have been at the epicentre of the violence that has flared up between protestors and police, declined by 3.8 per cent between Friday and Wednesday.
Link Reit, which has a number of shopping centres in the affected areas, declined by 1.8 per cent during the same period.
Link’s spokesman said share prices are “determined by forces in the trading market” and they “are not in an appropriate position to comment”.
The period of gloom has also come amid the escalating US-China trade war and lower spending by visitors, which have dampened retail sector growth and sentiment.
“Local economic uncertainties may continue to affect mainland tourists’ spending appetite. Sales and leasing demand for Admiralty and Wan Chai retail spaces may have been dampened by recent social events,” said Cynthia Ng, director of retail services at Colliers, adding that sustained domestic consumption will help retailers cope with recent sales drops.
Dennis Cheng, senior sales director at agency Ricacorp (CIR) Properties, said there is a danger of the impact from the demonstrations “spreading to various districts”.
“The impact is even faster and more serious than US-China trade war,” Cheng said.
The downbeat commercial property market has been hammered by the double whammy of the protracted trade war and the extradition bill controversy, said Roy Wong, director of Ricacorp.
“Only 2,881 industrial, commercial and retail properties changed hands in the first half of this year, down 46 per cent on the year,” said Wong. “It is the most downbeat in three years. Potential buyers have become very cautious when making purchases.”
Additional reporting by Daryl Choo
