Fashion
Cash registers in Hong Kong won’t be ringing merrily next year after the US rate hike, with locals likely to scratch their travel itch with the appreciating Hong Kong dollar.
The greenback reached a two-week high against a basket of major rivals yesterday after the US Federal Reserve raised interest rates for the first time in nearly a decade.
The Hong Kong dollar, pegged to the US unit, also rose.
Hong Kong Retail Management Association chairman Thomson Cheng Wai- hung said the interest hike’s immediate effect on the industry is limited, but further hikes next year would destabilize the market and make tourists further lose their appetite for the SAR.
“No matter if it is accommodation in hotels or shopping, it would appear more expensive for tourists. Many of them are going to Japan, South Korea and Europe. The trend would worsen,” Cheng said.
He expects retailers selling high-end products such as jewelry to take a hit.
According to a survey last month of its members, a single- digit decline in sales this Christmas is expected year-on- year. Most members feel next year’s performance will be worse. Cheng predicted that retail sales this year would drop 3 percent from last year.
As for local shoppers, some could be attracted to travel overseas due to the strong Hong Kong dollar. “It is not an advantage for local retailers,” Cheng said. The strong US dollar and hence HK dollar would encourage mainland tourists to explore other destinations, CLSA senior investment analyst Mariana Kou said.
“We believe Japan, Korea and Europe would continue to be beneficiaries,” Kuo said.
Safety concerns after recent terrorist attacks, however, may affect travel into Europe.
Miramar Travel saw Christmas bookings jump by 20 percent from last year. But they reminded Hongkongers that despite cheaper shopping, other travel expenses do not necessarily go down.
The rising popularity of Japan has led to a shortage of hotels and higher costs.
Travel Industry Council chairman Jason Wong Chun-tat said the hike had been expected and would have limited impact on exchange rates.
He remained optimistic for inbound tourism, saying hotel occupancy rates are expected to reach 80 to 90 percent during this holiday season.
