Source:
https://scmp.com/news/hong-kong/hong-kong-economy/article/3016984/hong-kong-retail-sales-may-fall-fourth-month-row
Hong Kong/ Hong Kong economy

Hong Kong retail sales in May fall for fourth month in row despite surge in mainland Chinese visitors for Labour Day holiday

  • Estimated year-on-year figure dropped 1.3 per cent to HK$40 billion, an improvement on 4.5 per cent decline in April
  • Trouble over contentious extradition bill and ongoing US-China trade war also take toll
There was a surge of mainland visitors for this year’s Labour Day holiday. Photo: Jonathan Wong

Hong Kong’s retail sales fell for the fourth straight month in May despite strong growth in tourist arrivals from mainland China during the national mini-Golden Week holiday.

The estimated year-on-year figure dropped 1.3 per cent to HK$40 billion (US$5.1 billion), much improved on the 4.5 per cent decline in April, the government announced on Tuesday.

Still, uncertainties remained for the sector’s performance in June as protests against the extradition bill gripped the city, with hundreds of thousands of people taking to the streets to demand a full withdrawal of the law amendments and violent clashes breaking out between protesters and police.

The now-suspended bill would have allowed the transfer of fugitives to the mainland and other jurisdictions with which Hong Kong had no extradition deal.

There was a surge of mainland visitors for this year’s Labour Day holiday. Photo: Jonathan Wong
There was a surge of mainland visitors for this year’s Labour Day holiday. Photo: Jonathan Wong

A government spokesman said the retail sales drop was smaller in May, partly because of the late arrival of the national Labour Day holiday, also known as the “mini-Golden Week”, between May 1 and 4.

He noted the holiday had led to a visibly larger year-on-year rise in visitor arrivals that month, during which 4.72 million mainland tourists entered Hong Kong, a 23.6 per cent surge.

“In the near term, the outlook for retail sales is likely to be clouded by the still-cautious consumption sentiment amid an uncertain global economic environment,” he said.

The city has been caught in the middle of the US-China trade war and suffered from souring investment sentiment that indirectly affected consumer confidence.

In February, retail sales dropped 10.2 per cent, the worst fall in almost 3½ years, followed by a 0.2 per cent decrease in March.

Economist Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, said the decline in overall sales value was expected because of the effects of the trade war, and even the mini-Golden Week could not make up for the drop.

He predicted a decrease of around 2 to 3 per cent in June from a year earlier, based in part on the extradition bill protests.

“There were clashes and the mood was not good for anyone,” he said.

“When there is a social movement in Hong Kong, there will be fewer mainland tourists coming to the city. Even though there is growth, the rate will not be as robust as in earlier months.”

Also, the meeting between President Xi Jinping and his US counterpart Donald Trump at last weekend’s G20 summit in Japan had not been confirmed in the first half of the month, he added.

Word of a meeting would likely have boosted confidence in the hopes the pair could strike some sort of deal over the trade war.

Michael Cheng, Asia-Pacific consumer markets leader at international advisory firm PwC, predicted June’s retail sales figure could record close to a double-digit decline from a year earlier.

He said the trade war had affected consumer sentiment and June was a quieter business month for the sector compared with May.

Cheng noted the anti-bill protests would affect June’s retail figures but that they would have limited impact on local consumer sentiment.

Last year’s high base number would also play a role, he added.