Hong Kong sales slump as mainland shoppers stay home

Hong Kong retail sales posted a second straight annual decline despite sharp discounting, the Census and Statistics Department said, reflecting a sustained decrease in visitors from mainland China and the diminished buying power of a weaker yuan.

Retail sales fell 3.7 percent to HKD475 billion (USD61 billion) last year, while volume dropped 0.3 percent. In December, when the tourism board counted nearly 11 percent fewer visitors, retail sales value fell 8.5 percent from a year earlier, worse than the 4.3 percent drop projected by analysts. The slump widened from 7.8 percent in November and was the largest since last January.

Sales of jewelry, watches, clocks and valuable gifts were among the hardest hit, slumping 17 percent in December and 16 percent for the full year. Clothing and department store sales also declined. Erwan Rambourg, a retail analyst at HSBC Holdings Plc in Hong Kong, said high-­end watch and jewelry sellers suffered as shoppers from mainland China avoided lavish purchases and falling currencies in other Asian nations reduced prices for goods bought elsewhere.
Hong Kong Tourism Board Executive Director Anthony Lau said late last month that same-day visitors to Hong Kong were “a bit weaker” than the same time last year, portending an inauspicious start to the Chinese New Year holiday next week.

The Lunar New Year celebration is a peak season for tourism in Hong Kong, bringing in more than 5 million monthly visitors compared with about 4.5 million in an average month. Day trips before the holiday usually account for more than half those visits.
Visits from the mainland fell 16 percent in December from a year earlier, the tourism board said last week. Total visits to Hong Kong fell 2.5 percent last year to 59.3 million.

Hong Kong retail sales are down on an annualized basis every month from March through December, according to data compiled by Bloomberg Intelligence. The Hong Kong dollar has strengthened against the yuan, making it more expensive for mainlanders to shop.

Chow Tai Fook Jewellery Group, the world’s largest listed jewelry chain, said last month that sales during Chinese New Year would be challenging. Emperor Watch & Jewellery Ltd blamed a preliminary 2015 loss on a drop in foot traffic caused by the strong Hong Kong dollar, high rental pressure in the city and austerity initiatives in mainland China.