Hong Kong retail sector posts ‘ideal’ 13 per cent growth but US-China trade war squeeze looms
Latest official figures show impressive double-digit expansion in the first half of 2018, and retailers are optimistic going forward despite headwinds from trade row
Hong Kong’s retail industry basked in double-digit growth in the first half of the year, according to the latest government figures released on Wednesday, and retailers have expressed confidence for the second half despite the threat posed by the escalating US-China trade war and weakening yuan.
Shoppers spent HK$248 billion (US$31.6 billion) between January and June, up a healthy 13.4 per cent on the same period last year.
In June the sector recorded its fifth consecutive month of double-digit growth, at a better-than-expected 12 per cent.
The Hong Kong Retail Management Association called the figures “ideal” but cautioned that expansion was set to slow. Its chairman forecast high single-digit growth in the second half and a full-year figure of about 10 per cent, citing China’s trade spat with the United States as a restraining factor.
Early last month Washington slapped 25 per cent tariffs on US$34 billion worth of Chinese goods. Beijing responded in kind with its own 25 per cent duty on US imports worth a similar amount.
US President Donald Trump has threatened to impose tariffs on all US$500 billion worth of imported goods from China.
“China’s gross domestic product will be hit, and mainland tourists’ appetite for consumption should also be affected,” association chief Thomson Cheng Wai-hung said.
Hong Kong’s retail industry is highly dependent on mainland tourists, who account for three in every four visitors. Cheng said some of the association’s 9,000 member companies in the luxury sector had told him sales growth had already slowed.
The recent fall in the value of the mainland Chinese currency, the yuan, against the US dollar and Hong Kong dollar had also played a role, he said.
Retailers selling high-end goods such as watches and cameras would further feel the pressure in the next few months and into early next year, Cheng added, as the trade war and weaker yuan took a “double hit” on the industry.
The renminbi fell 8.8 per cent between April 2 and Wednesday, when it stood at 87 yuan per HK$100, according to the China Foreign Exchange Trade System. It depreciated against the US dollar by a similar margin.
But Cheng said the opening of the Hong Kong-Zhuhai-Macau bridge in the fourth quarter and the express rail link to Guangzhou would provide a significant mitigating boost.
The sector’s performance in June had been better than expected, Cheng added. Sales in all goods categories increased in the month, with the best performers being jewellery, watches, clocks and valuable gifts, which saw growth of 27.8 per cent.
Cheng believed the number of tourists visiting the city in the full year could hit a record high of more than 60 million, thanks to the strong performance in the first six months. Some 30.6 million people came to the city in the first half – a rise of 10.1 per cent on the same period last year.
Retail sales in 2019 could also hit a record high if the trade war petered out and the yuan stabilised, Cheng said.