Hong Kong Aug retail sales worst on record as protests escalate (updated)

Bossini International Holdings

02/10/2019 11:03

* Aug retail sales value drops 23% y/y, 7th month of decline
    * Aug tourist arrivals down 39.1% y/y, 2nd straight month of
fall
    * Jewellery, watches sales down 47.4% in Aug vs July's 24.3%
drop 
  
    * Government says sales to remain in doldrums in near term

    By Donny Kwok and Twinnie Siu
    HONG KONG, Oct 2 (Reuters) - Hong Kong's August retail sales
were the worst on record, the government said on Wednesday, as
escalating anti-government protests that have gripped the
Chinese-ruled city for nearly four months scared off tourists
and battered spending.  
    Retail sales in August fell 23% from a year earlier,
government data showed, worse than a 21.48% fall in September
1998, according to Refinitiv data, as violent clashes spread
across shopping districts and took a heavy toll on malls. 
    Cat-and-mouse clashes on Tuesday spread from the shopping
district of Causeway Bay to the Admiralty area and then on to
the New Territories, with police firing tear gas and water
cannon at petrol bomb-throwing activists.  urn:newsml:reuters.com:*:nL3N26M2JC
    Protesters were out again on Wednesday but there were no
reports of serious trouble.
    Market analysts say the outlook is overshadowed by the
protests and a weak Chinese yuan that translates into lower
spending. 
    Retail sales fell to HK$29.4 billion ($3.75 billion) in
August, a seventh consecutive month of decline. July's drop was
a revised 11.5%. In volume terms, retail sales in August fell
25.3%, compared with a revised 13.1% drop in July.
    For the first eight months of 2019, retail sales fell 6% in
value from a year earlier and 6.9% in volume terms.
    "Retail sales will likely remain in the doldrums in the near
term, as the worsened economic outlook and local protests
involving violence continue to weigh on consumer sentiment and
inbound tourism," a government spokesman said.
    The government will monitor the implications for the labour
market and the economy, he added.
    Hong Kong is facing its first recession in a decade, with
the government recently cutting its full-year 2019 growth
forecast to 0-1%, down from 2%-3% previously. 
   
    TOURISM HIT
    Hong Kong's finance minister had said earlier that
anti-government protests were taking a heavy toll on the city's
tourism and retail sectors, while hotels in some locations were
only half-full with room rates plunging 40-70%.  urn:newsml:reuters.com:*:nL3N260127
    August tourist arrivals fell 39.1% on year to 3.59 million,
according to the Hong Kong Tourism Board, the biggest decline
since May 2003 when an outbreak of severe acute respiratory
syndrome (SARS) hit. They were down 30.9% from July. (https://bit.ly/2oiGiWf)
    The number of mainland visitors fell 42.3% in August,
accounting for 77.5% of the total.
    Many businesses have felt the pain, especially some of the
city's large luxury retailers who rely heavily on mainland
Chinese spending, as the protests show no sign of easing. 
    Sales of jewellery, watches, clocks and valuable gifts
plunged 47.4% on-year in August, data showed, after a revised
24.3% drop in July. 
    Medicines and cosmetics fell 30% in August, compared with
revised 16.5% fall in July. Department store sales dropped 29.9%
in August, against a 10.4% fall in July.
    Hong Kong-based skin care and cosmetics chain operator Sa Sa
International  0178.HK  posted 32% year on year drop in its
sales in Hong Kong and Macau in August and expected its
performance in September to remain "very weak".  urn:newsml:reuters.com:*:nL3N2692DE
    "Uncertainties related to the social unrest in Hong Kong
since June 2019 and the trade dispute is leaving no room for
optimism on economic growth in 2019," Bess Tsin, chairman of
casual wear group Bossini  0592.HK , said in an earnings
statement.
    The Hong Kong Retail Management Association had earlier
urged landlords to halve rents for six months and expected some
retailers may have to sack staff or even shut down. 
($1 = 7.8395 Hong Kong dollars)

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Datastream - HK retail sales Aug 2019    https://tmsnrt.rs/2piyJiL
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 (Reporting by Donny Kwok and Twinnie Siu; Additional reporting
by Noah Sin
Editing by Anne Marie Roantree, Robert Birsel)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))