Gold sales in Hong Kong are headed for the worst downturn in at least 15 years thanks to shrinking spending by Chinese tourists.
Consumption may drop by as much as a quarter this year from 2015, assuming low volatility in the bullion price in the second half, Bloomberg reports, citing Haywood Cheung, permanent honorary chairman of the Chinese Gold & Silver Exchange Society.
Sales were 51.4 metric tons in 2015, down from 85.6 tons two years earlier, the exchange said.
China’s economic slowdown and anti-corruption campaigns have hurt luxury retailers in Hong Kong with visits by Chinese tourists, who account for almost a third of luxury spending globally, falling in March to the lowest since 2013.
Hong Kong-based Chow Tai Fook Jewellery Group Ltd., the world’s largest jewelry retailer by market value, said this month that full-year profit dropped as much as 50 percent.
“Fewer mainland visitors are now coming to Hong Kong and those who come spend less,” Cheung said in an interview from Hong Kong.
The city’s gold and jewelry retailers are bracing for an “icy winter” during the next 12 to 24 months, he said.
The falling visitor count is also partly attributable to political and social unrest in Hong Kong amid growing political tensions about Beijing’s rule over the former British colony.
Chinese tourist visits to Hong Kong fell 3 percent in 2015, the first annual decline in a decade.
The weakness accelerated into the first three months of 2016, with a 15 percent drop, according to Bloomberg Intelligence.
Gold fell Tuesday for a fifth straight day, the longest slump in six months, as more Federal Reserve officials weighed in with comments that supported the case for higher borrowing costs.
Bullion for immediate delivery was little changed at US$1,227.24 an ounce at 6:43 a.m. in Singapore, according to Bloomberg generic pricing.
– Contact us at [email protected]