Unlike previous years, there haven't been long queues outside luxury goods shops in Hong Kong during the latest Chinese Golden Week holiday. Photo: Bloomberg
by Ben Kwok
EJ Insight » Hong KongToday, 15:44
If summer is for relaxation and sports, autumn is for shopping and investing.
According to the Chinese calendar, autumn is the traditional peak season for consumption – be it purchases of flats, cars or jewelry — because people’s wallets seem to open wider as the weather gets cooler.
For more than a decade, China’s Golden Week holiday following the Oct. 1 National Day served as a boon and a sort of thanksgiving to Hong Kong’s retailers.
How many times have we not seen local newspapers splash pictures of mainland tourists lined up outside the Louis Vuitton store at Canton Road or wheel multiple trolleys inside SaSa Cosmetics outlets, and also the jam-packed ferry terminals?
Well, that may be just a memory now, as the situation this year has been anything but uplifting for the tourism and retail sectors, going by the reports of dismal first-day sales Thursday.
Many shops didn’t have the usual crowds and visitor numbers at theme parks and other tourist attractions were also noticeably low.
Some observers are warning of a 20 percent fall in Ocean Park visitors, a 30 percent slump in pharmacy/milk powder shop sales and a 40 percent room rate drop in high-end hotels compared to previous years.
Meanwhile, in Macau, there could be an even greater slide in gambling revenue during the holiday week this year.
A host of factors, including a strong Hong Kong dollar, China’s anti-corruption and austerity drive and anti-mainlander protests, have affected mainland tourist consumption in Hong Kong.
Also, wealthy Chinese are increasingly opting to go to Europe or Japan for their holidays, denting the prospects of luxury retailers here.
Now, we came to this question: is the trend here to stay, and should we brace for a new normal in the retail landscape?
It is worth noting that China, despite a possible GDP revision to below 7 percent, has had a high spending autumn domestically.
September kicked off well in major cities on the mainland. Property sales in terms of area were up 33 percent in the first two weeks, according to reports.
The momentum is likely to continue as the People’s Bank of China has lowered the mortgage down-payment requirement to 25 percent from 30 percent, helping stimulate buying demand.
Ditto for car sales, with the government announcing a halving in the sales tax for passengers cars with engines of 1.6 liters or less and seating fewer than 10 people.
Meanwhile, Chinese dama are again looking to stock up on things like gold and diamonds as prices have reached multi-year lows.
In view of the long holidays and still robust consumption appetite, we can expect that Chinese spending overseas will hit another high.
While a good a deal of that money may bypass Hong Kong, all is not lost for the city. Any prediction of doomsday scenario could be off the mark.
Locals will continue to spend and prop up the city’s retail sector despite the various uncertainties surrounding the global economy.
Meanwhile, there are also hopes that the stock market will recover after the Hang Seng Index slid 5,600 points, or 20 percent in the three months to September — its worst third-quarter showing in 50 years.
If people believe that they have already seen the worst and things will get better, it won’t be surprising.
In the past decade, October has usually been a good month for local equities and it’s quite possible that we will see the same now.
While the overall economic mood may be grim this month given the weaker mainland visitor flow and poor golden week sales, the fourth quarter as a whole should hold up well compared to the same period last year.
Let’s just ignore the doomsday headlines. After all, we had dire predictions even last year when some so-called experts warned that the Hong Kong economy will collapse due to the Occupy protests.
Well, things haven’t turned out so bad, have they!
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