Hong Kong June retail sales fall for 16th straight month

Hong Kong retail sales fell for the 16th successive month in June, hurt by a continued drop in mainland tourists and weak local spending, with retailers now also facing challenges from a strong local currency.


Hong Kong

Uncertainty due to Britain's shock vote to leave the European Union is expected to weaken the British and other European currencies, making Hong Kong an even more expensive place to visit and less attractive for shoppers. The Hong Kong dollar's peg to the greenback means it is prone to strengthen when other Asian currencies weaken.

Hong Kong retail sales in June slid 8.9 percent from a year earlier to HK$33.7 billion ($4.34 billion) in value terms, slower than a revised 8.3 percent slump in May. In volume terms, June sales dropped 9.6 percent, government data showed on Tuesday.

"Looking ahead, the near-term retail sales performance will still depend on the performance of inbound tourism as well as the extent to which consumer sentiment will be affected by the lingering uncertainties about the economic outlook," the government said in a statement.

Hong Kong tourist arrivals in June fell 1.7 percent from a year earlier to 4.29 million, after sliding 6.4 percent in May. Mainland visitors, who account for 74.8 percent of the total, fell 3.8 percent to 3.21 million in June.

Mainland tourists are avoiding Hong Kong amid political tensions between the territory and Beijing and as other Asian destinations such as Japan and South Korea offer cheaper travel options.

The city is also struggling with mounting economic challenges and a strong currency, as the Hong Kong dollar is linked to the U.S. dollar. Analysts said Hong Kong is most exposed to global slowdown after Brexit.

Sales of jewellery, watches, clocks and valuable gifts in June fell 20.4 percent in value terms, the 22nd consecutive month of decline. Department store sales slid 10.5 percent on the year, while wearing apparel fell 0.6 percent.

Hang Seng Bank has revised Hong Kong's economic growth lower to 1.3 percent for 2016, from 1.5 percent previously, amid increased uncertainty from Brexit.

In addition to jewellery and cosmetics retailers, travel services providers have also been hit.

China Travel International warned of a 69 percent fall in first-half profit hurt by yuan depreciation, and a weaker hotel business in Hong Kong and Macau.

Chow Tai Fook Jewellery, China's largest jewellery retailer by market value, saw narrower declines in same store sales for the April-June quarter, but Hong Kong and Macau remained weak.

Smaller rival Chow Sang Sang expects H1 profit to fall 50-60 percent from a year ago due to weak demand. ($1 = 7.7597 Hong Kong dollars)
 

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