Chow Sang Sang Fears Impact of Trade War

RAPAPORT... Hong Kong-based jeweler Chow Sang Sang warned that trade tensions may impact its earnings for the remainder of 2018, even after first-half sales grew."Though the results of the first half of 2018 looked encouraging, the impact of international trade disputes, the effect of [the US Federal Reserve's June] interest-rate increase as well as currency revaluation may take their toll in [the second half]," the company said Monday. Diplomatic tensions between the US and China have led to volatile stock marketsand exchange rates this year, the retailer said. The Chinese yuanweakened against the Hong Kong dollar in the second quarter, potentiallyrestricting the spending power of tourists from the mainland visiting HongKong. Chinese economic growth is also slowing, while global conditionscould create further challenges in the coming months, Chow Sang Sang added.Sales increased 19% to $1.22 billion (HKD 9.56 billion)for the six months ending June 30 as consumer sentiment remained robust ingreater China despite the circumstances. Revenue from the jewelry-retailsegment grew 23% to $1.1 billion (HKD 8.65 billion), with sales in Hong Kongand Macau up 24% due to increased tourism. Profit surged 54% to $77.1 million (HKD605.5 million).However, a strong performance in the second half of 2017may also damage the company's results in comparative terms for the same periodthis year, it noted.The company did not release detailed data for salesgrowth in mainland China during the period. The group's other revenue comesfrom businesses such as wholesaling and real estate.Image: Chow Sang Sang