Chow Sang Sang

Jewellers lose out in Beijing's anti-graft drive

Watch retailers also suffer as mainland vows to combat gift giving in lead-up to Lunar New Year

PUBLISHED : Friday, 08 February, 2013, 12:00am
UPDATED : Friday, 08 February, 2013, 3:53am


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The mainland's anti-corruption initiatives in the lead-up to the Lunar New Year are threatening to hurt sales of expensive trinkets from luxury retailers in Hong Kong.

Shares of high-end jewellery and watch retailers slumped yesterday amid concerns that the anti-corruption push on the mainland would take its toll on sales of luxury goods. Emperor Watch & Jewellery, which fell the most in more than a year, ended down 7.14 per cent at 91 HK cents. Chow Sang Sang dropped 7.2 per cent to HK$20.60, while Luk Fook slid 5.6 per cent to HK$25.45.

Watch sellers also suffered. Oriental Watch fell 8.4 per cent to HK$2.96 and Hengdeli was down 3.4 per cent to HK$2.54.

The benchmark Hang Seng Index dipped 0.3 per cent.

Just a few days before the Lunar New Year, the State Administration of Radio, Film and Television ordered domestic television stations and radios to stop airing advertisements suggesting "gift giving", Xinhua reported on Tuesday. The media watchdog said in a circular that advertisements that encouraged people to send expensive gifts to bosses had delivered an incorrect message to society.

The move is considered as part of Beijing's efforts taken to combat corruption.

Xi Jinping, the new Communist Party general secretary, said the government would take harsh measures against gift giving and corruption.

The industry estimates about one-third of the luxury goods sold on the mainland are bought as gifts and a tenth of them are used for bribery.

"This will add more uncertainty on sales of luxury goods," said Eugene Mak, an analyst at OSK Group. "As [the shares of] some jewellers have rallied over the past few months, many investors tend to take this chance to sell them."

Hong Kong's retail sales are expected to get a boost from the strengthening economic momentum during the Lunar New Year holidays next week.

"For one thing, mainland consumers are feeling better about both job and income security. So visitors should be less thrifty than before," said HSBC economist Donna Kwok.

"For another, Hong Kong's asset markets have been buoyed by the mainland's stronger macro conditions. That should further shore up Hong Kong's consumer confidence, which has already been enjoying the support of resilient conditions in the job market for quite a while."