Desperate for Golden Week glimmer of hope

Retailers have their eyes firmly set on National Day Golden Week following months of upsetting sale figures, with only a handful of factors to cheer them up.

If the US Federal Reserve does press ahead with its much anticipated first interest rate cut later this month, general sentiment may receive a boost to clear the way in time for consumers here and in the mainland to spend more.

Although the effect of an interest rate cut is not to be overestimated since the economy is still weak here in Hong Kong and the mainland, nothing should be underestimated either.

The retail performance during Golden Week will give everyone a clearer idea of how much the consumption patterns and sentiments might adjust in the city and across the border as a result of the anticipated interest rate cut.

According to the Census and Statistics Department, the city's retail sales dropped 11.8 percent in July from a year ago. It marked the first time the number had come down by double digits since the retail figures began heading south more than five months ago.

According to the department, total retail sales in July were estimated to be HK$29.1 billion in volume.

The fall accelerated from the drop of 9.7 percent in June compared to the corresponding period a year earlier, enlarging the decrease to 7.3 percent for the first seven months.

Despite some positive factors - including the recent green light by mainland authorities to increase the duty-free allowance for mainlanders returning home from shopping trips to the SAR - the Hong Kong Retail Management Association said a majority of its members remained cautious about what would happen next.

It recently conducted a survey in which employees of 4,000 retail outlets were polled. More than 60 percent were reported to be keeping their fingers crossed as they were pessimistic that their sales would fall by single or double digits during Golden Week.

About 25 percent appeared to be more upbeat, confident they would be able to sell more during the period, while the remainder anticipated little change, selling no more and no less.

This year the National Day public holiday falls on a Tuesday and, by taking an extra day off on the Monday, local residents could readily plan a long weekend for a short trip outside the city.

So, come National Day Golden Week, will Hongkongers continue to leave the city in droves, thereby negating the positive impact brought about by the anticipated timely interest rate cut and an anticipated increase in visitor numbers due to a slightly softened Hong Kong dollar?

These factors are external and very much beyond the city's control.

Whether or not Hongkongers are willing to remain and spend in the city is an internal issue.

As the city's authorities map out strategies to attract outsiders to come and spend more in Hong Kong, they should also continue to explore ways to improve local sentiment and encourage residents to remain in the city.

Let's hope for the best come National Day Golden Week.