Retail sales slump for fifth month

Business | Bloomberg and Kevin Xu 2 Aug 2019

Bloomberg and Kevin Xu

Hong Kong's retail sales by value dropped 6.7 percent in June from a year earlier, the fifth straight month of declines amid ongoing political protests, according to a government report yesterday, much worse than the 1.9 percent contraction forecast by economists.

For the first half of 2019, it was provisionally estimated that the value of total retail sales decreased by 2.6 percent compared with the same period in 2018.

The overall economy contracted in the three months through June from the first quarter, and embattled Chief Executive Carrie Lam said earlier in the week that she saw "no room for optimism" for the economy this year.

Hong Kong's trade-dependent economy was facing a full-year deceleration even before protests over the government's extradition bill began disrupting business and tourism in June. The unrest continued into July and that likely affected retail sales last month as well, and without resolution the effect would continue.

Carie Li, an economist at OCBC, said the increasing social unrest would affect inbound tourist numbers and that, combined with the strong dollar, the trade war and the global slowdown, makes a larger fall in July likely.

The government was also pessimistic about the outlook.

"Near-term performance of retail sales will likely remain subdued, as the weakened global and local economic outlook and other headwinds continue to weigh on consumption sentiment," the government said in a statement. "The recent mass demonstrations, if continued, would also dent the retail business further."

Meanwhile, Bank of America Merrill Lynch cut the local gross domestic product forecast this year from 2.2 percent to 0.8 percent due to weaker-than-expected growth in the second quarter.

Citi also revised down the local GDP forecast this year for the second time in two weeks from 2.1 percent to 1.5 percent, as longstanding protests may prevent visitors from coming to Hong Kong and affect the retail industry for the whole summer.

Stella Zhai

Hong Kong's primary market witnessed another forfeiture amid the recent unrest as home owners sold at discounts and left the market.

A buyer of a 2,605-square-foot duplex in Mount Vienna in Sha Tin, under Hanison Construction (0869) - sold for HK$94.4 million or HK$36,238 per sq ft last week - gave up his HK$4.72 million deposit, the first forfeiture of the project.

Meanwhile, Miss Hong Kong Louisa Mak Ming-sze and her brother bought three nano flats at T Plus in Tuen Mun, with a 141-sq-ft unit sold for HK$1.91 million or HK$13,539 per sq ft.

Separately, a 517-sq-ft unit in Laguna City changed hands at HK$7.1 million, or HK$13,733 per sq ft, about 10 percent lower than the market price range between HK$7.85 million and HK$7.9 million. The seller had bought the flat in 1991 for HK$1.12 million.

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