Hong Kong retail sector marks sixth consecutive month of growth
Recovery, after years of contraction, driven by bigger tourist numbers and surge in luxury sales
Hong Kong’s retail sector is on track for a steady recovery, with sales rising 2.7 per cent year on year for August, boosted by a strong local jobs market and improved tourist numbers, according to official figures.
The latest numbers confirmed the sector’s sixth consecutive month of growth, but expansion was smaller than the previous month. Sales added 4 per cent in July, year on year.
And analysts said they expected the sector’s recovery, after a two-year slump, to continue for the rest of 2017, thanks to the “wealth effect” of an upbeat stock market, the luxury sector’s long-awaited rebound and the launch of new iPhone devices.
“The near-term outlook for retail sales should remain positive given the favourable job and income conditions and stabilisation of inbound tourism,” a government spokesman said in a statement.
But he warned “various external uncertainties” were causing concern, without going into details.
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The Hong Kong Retail Management Association said the August growth was satisfactory, given that sales were affected by several typhoons and bad weather in the month. It said it expected sales to grow at a stronger 4 to 5 per cent in October.
The kinds of purchases driving the August growth were jewellery, watches and clocks, and valuable gifts – luxury items popular with mainland tourists – whose sales increased 7.3 per cent compared with last August.
The luxury subsector, which usually accounts for about 16 per cent of total retail sales, has rebounded strongly since July. In that month luxury sales jumped 13.3 per cent year on year after some double-digit declines in the previous two years.
“The growth shows the transformation of luxury brands has started to bear fruit,” Mariana Kou, retail analyst at brokerage CLSA, said.
Kou said brands previously focused on selling expensive gifts to mainland shoppers. But now, she said, they are offering cheaper products for middle-class consumers. And a resultant increase in volume has driven up overall sales.
The bullish stock market recently boosted Hongkongers’ appetite for luxury goods, Kou said, adding that a major local watch seller – whose name she could not disclose – reported sales growth of more than 20 per cent in the third quarter of the year.
The Hang Seng Index, a key gauge of the Hong Kong stock market’s performance, added almost 10 per cent in the past three months, closing at 28,173 on Tuesday.
Sales at supermarkets and department stores grew 2.3 per cent and 5.2 per cent respectively, according to the newly released figures.
Besides, the launches of the iPhone 8 and iPhone X smartphone models were expected to drive up Hong Kong’s overall retail sales in September and October, Chinese University associate professor of economics Terence Chong Tai-leung said.
Hong Kong has for years been a shopping paradise for lovers of Apple products, especially those from the mainland. The same devices are usually more than 10 per cent cheaper in the city than on the mainland, thanks to Hong Kong imposing zero duty on most electronic products.