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Tuesday, August 2, 2016, 22:51

HK retail sales see steepest 17-year dive

By Lin Wenjie
HK retail sales see steepest 17-year dive
Causeway Bay – one of Hong Kong’s busiest shopping districts. Hang Seng Bank said in a recent report that although the city’s retail sales did better in the second quarter, the underlying picture remains weak with falling consumer durable goods reflecting a lack of consumer confidence and a slowing global economy pointing to soft demand for Hong Kong’s exports. (Cho Seong-Joon / Bloomberg)

Hong Kong’s retail sales in the first half of 2016 registered the biggest drop in 17 years, as mainland visitors continued to stay away and local consumer sentiment weakened amid challenging global conditions.

However, the industry’s performance in the second quarter improved slightly over the first quarter of this year.

According to the latest figures from the Census and Statistics Department released on Tuesday, the value of total retail sales fell for the 16th successive month in June – decreasing by 8.9 percent to HK$33.7 billion compared with the same period in 2015 and worse than May’s dip of 8.4 percent.

The accumulative drop for the first half of 2016 hit 10.5 percent, capping its worst performance since 1999. Retail sales plummeted 10.9 percent in the first six months of 1999.

A 37.2-percent, year-on-year plunge in the value of sales of miscellaneous consumer durable goods was cited as the main contributing factor for the June’s retail slide, coupled with a 20.4-percent drop in sales of luxury goods, which are popular among mainland visitors, including jewelry, watches and clocks, and valuable gifts.

A government spokesman said the drop in June’s retail sales was due to the fall in visitor spending and more cautious consumer sentiment amid subpar economic conditions.

“Nevertheless, retail sales improved moderately in the second quarter compared to the first quarter,” he said.

Based on the seasonally adjusted series, the value of the city’s total retail sales climbed 2.8 percent in the second quarter over the preceding quarter, while the volume of total retail sales increased by 1.9 percent.

Market experts, however, were not impressed by the recovery in retail sales in the second quarter.

In a report on July 21, Hang Seng Bank said although Hong Kong’s retail sales did better in the second quarter, the underlying picture remains weak with falling consumer durable goods reflecting a lack of consumer confidence and a slowing global economy pointing to soft demand for Hong Kong’s exports.

The bank also expressed concern over the shockwaves from Britain’s decision to leave the European Union. “The uncertainties created by Brexit may make Hong Kong businesses and households cautious about investment and consumption, which have already dragged private consumption expenditure’s annual growth to 0.7 percent in the first quarter,” the report said.

Looking ahead, the government spokesman believed that the near-term retail sales performance will still depend on whether inbound tourism would pick up, as well as the extent to which consumer sentiment will be affected by the lingering economic uncertainties.

Hang Seng Bank said it expects the SAR’s economic growth to be 1.3 percent for 2016 – a downward revision from its previous forecast of 1.5 percent.

cherrylin@chinadailyhk.com
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