18 February 2019

Retail sales may stay weak for rest of the year

Hong Kong’s retail sales rose 8.1 percent in August, the slowest growth so far this year. Together with the end of the gold-buying frenzy, restrictions on infant formula sales, the implementation of a new tourism law in mainland China and the uncertainty in the housing market, the city’s retail market is likely to remain sluggish through the rest of the year.

Kwan Cheuk-chiu {關焯照}, an independent economist, says retail sales will probably stay below expectations in the next two months as house prices in Hong Kong started to drop in September, further dampening consumer sentiment. The ban of zero-fare tours from China is also negative for Hong Kong retailers in some sense, according to the Hong Kong Economic Journal.

Caroline Mak Shui-king {麥瑞琼}, chairperson of the Hong Kong Retail Management Association said: “Local retail sales saw single-digit growth in July and August, and given the low base last year, the situation is worrying.” 

“No more gold-buying frenzy, sales of infant formula are being restricted, and there’s the new tourism law — all these are all going to pose challenges for local retailers,” she added.

Huang Weichang {王偉常}, chairperson and chief executive of jewelry retailer Luk Fook Holdings (00590.HK), said same-store sales during the “Golden Week” did not change much from last year, posting a mere single-digit growth. Mainland consumers accounted for about 70 percent of the group’s total sales.

He admitted that with the gold-buying spree over, demand for jewelry in the second half of the year will be lower than in the first half, and so will be the sales growth.

Retail plays, however, were still being cheered up by the week-long holiday. Cosmetics retailers SA SA Holdings (00178.HK) has surged nearly 4.6 percent since the Golden Week kicked off last Tuesday, while retail jewelers like Luk Fook, Chow Tai Fook (01929.HK) and Chow Sang Sang (00116.HK) have climbed 1.4 to 3.4 percent.

– Contact the writer at [email protected]




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