Protests Dent Hong Kong Retail Outlook

RAPAPORT... Retail sales in Hong Kongare set to fall by 5% in 2019, with the decline expected to be even sharper inthe luxury-goods market, which includes jewelry. The new estimate, publishedlast week by PricewaterhouseCoopers (PwC), is a downgrade on its previousforecast. The advisory firm had anticipated that Hong Kong's retail sales woulddip by 3%. Reasons cited for the lower forecastinclude the US-China trade war and ongoing protests in the region, which havecontributed to dwindling tourism from mainland China. "The recent political and social unrest,temporary closure of the Peak Tram due to renovations, coupled with a lack ofnew tourist attractions might lower mainland tourists' appetite to visit HongKong in the short term," said Michael Cheng, PwC's consumer-markets leader for AsiaPacific, Hong Kong and China. "Meanwhile, a weakening economy as well asuncertainty surrounding the trade dispute present risks to the outlook in themedium to longer run." PwC's estimates mirror the retailresults the Hong Kong government's Census and Statistics Department published earlierTuesday. Sales for jewelryand other luxury items remained sluggish in the municipality last month,despite a boost in tourism over the Labor Day holiday period at the start ofthe month. While some retail categories saw modest increases, jewelry and otherluxury items did not improve. Revenue from jewelry, watches, clocksand other valuable gifts fell 2.7% year on year to HKD 6.7 billion ($858.9million) in May, compared with the same month in 2018, according to the report. Total retail sales slipped 1.3% to HKD 39.97 billion ($5.13 billion). Tourists from mainland China typically travelto Hong Kong to purchase luxury goods during the Labor Day holiday period,which this year ran from May 1 to 4. But while the city saw 4.7 millionmainland visitors in May, a 24% year-on-year increase, this did not translateto an uplift in the sales of luxury items. The retail performance in Hong Kong hasremained subdued in recent months, and the "outlook for retail sales willlikely be clouded by the still-cautious [consumer] sentiment amid an uncertainglobal economic environment," a governmentspokesperson said. For the first five months of2019, retail sales of jewelry, watches, clocks and other valuable giftsdecreased 4.4% year on year to HKD 34.88 billion ($4.47 billion). Overallretail sales fell 1.8% to HKD 206.1 billion($26.44 billion). Image: Retail stores in Hong Kong. (Another Believer)