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Mainland shoppers ease HK's woes
Source: Bloomberg News |
September 2, 2011, Friday
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Print Edition
Print Edition
QUEUING outside a Louis Vuitton shop in Hong Kong, Lin Shasha said she is visiting from Shenzhen to buy leather belts and handbags because the products are genuine and her yuan goes further.
Lin, 30, is among the millions of Chinese mainland visitors driving a retail sales boom in Hong Kong even as weakness in global demand threatens to tip the city into its second recession in three years.
A 25 percent increase in sales for the first seven months was the biggest since data began in 1981, according to the statistics department.
Tourists from the mainland are "a crucial lifeline for Hong Kong's economy," said Donna Kwok, a Hong Kong-based economist at HSBC. "Hong Kong shoppers seem immune to inflation and global financial market turmoil."
A stream of Mandarin-speaking shoppers in Tsim Sha Tsui's Canton Road, carrying bags of Vivienne Westwood, Gucci and Burberry products, demonstrated that a US$350 billion decline in the value of stocks on the mainland since mid-April has failed to kill the tourist trade.
Their spending may help to limit what Morgan Stanley and Daiwa Capital Markets say is set to be a second straight quarterly contraction in Hong Kong's economy.
In July, sales jumped 29 percent to HK$35.2 billion (US$4.5 billion) - a record gain, excluding January and February figures, which are distorted by the Lunar New Year holiday. Sales of jewelry, watches and clocks soared 52 percent from a year earlier. Electronics sales rose 65 percent.
As well as the increase in sales value, volumes leapt over the first seven months, particularly July, the government said.
In the past two years, a gain in the value of the yuan of about 8 percent against the Hong Kong dollar, which is pegged to the US currency, has boosted the spending power of shoppers from the mainland.
Some of those visitors, including Lin, say items in Hong Kong are less likely to be counterfeit. In addition, they avoid the mainland's taxes on luxury goods.
The number of visitors from the mainland surged 33 percent to 2.68 million in July compared with a year earlier, according to figures from the Hong Kong Tourism Board.
Visitors from the mainland staying one night or more spent an average of HK$7,453 each per trip last year, the highest amount of any group, according to the board. The mainland also provided the top spenders in the same-day category at HK$2,356 each.
Bullish sentiment
Chow Sang Sang Holdings International, a Hong Kong-listed maker and retailer of jewelry, said its sales of gold accessories in Hong Kong and the mainland jumped 37 percent by weight in the first half of the year because of "pervasively bullish" sentiment even as the price of the metal soared.
Shares in the company, which operates on the mainland and in Hong Kong, Macau and Taiwan, are up 41 percent this year, compared with a 12 percent decline in Hong Kong's Hang Seng Index.
In Shanghai, Xu Qing, who coordinates tourist trips to Hong Kong for Shanghai Jinjiang Travel, said Apple products, such as the iPhone and iPad, are at the top of clients' shopping lists because they are available earlier in the city.
In July, Hong Kong reported its fastest inflation since 1995 as rising rents and food costs and changes to government housing subsidies boosted the rate to 7.9 percent.
HSBC's Kwok said she sees a risk that consumers will "eventually cave in" if inflation stays high and financial markets are turbulent.
Denise Yam, a Hong Kong-based economist for Morgan Stanley, said the strength of retail sales in July was "certainly a surprise" and the numbers for August and September may be weaker.
At Daiwa, analyst Kevin Lai predicted the city's economy will shrink 1.5 percent this quarter from the previous three months "due to weakening global demand and intensifying global financial turmoil."
The technical definition of a recession is two straight quarters of contraction. In the second quarter, the economy shrank 0.5 percent as export growth slowed.
Lin, who is a saleswoman, emerged from the Louis Vuitton outlet empty-handed, saying that as a frequent visitor she was not in a rush to buy and would continue her search elsewhere.
"I know nothing about Hong Kong's economy, but it seems to me it must be doing well - the shops that we visit are always so crowded."
Lin, 30, is among the millions of Chinese mainland visitors driving a retail sales boom in Hong Kong even as weakness in global demand threatens to tip the city into its second recession in three years.
A 25 percent increase in sales for the first seven months was the biggest since data began in 1981, according to the statistics department.
Tourists from the mainland are "a crucial lifeline for Hong Kong's economy," said Donna Kwok, a Hong Kong-based economist at HSBC. "Hong Kong shoppers seem immune to inflation and global financial market turmoil."
A stream of Mandarin-speaking shoppers in Tsim Sha Tsui's Canton Road, carrying bags of Vivienne Westwood, Gucci and Burberry products, demonstrated that a US$350 billion decline in the value of stocks on the mainland since mid-April has failed to kill the tourist trade.
Their spending may help to limit what Morgan Stanley and Daiwa Capital Markets say is set to be a second straight quarterly contraction in Hong Kong's economy.
In July, sales jumped 29 percent to HK$35.2 billion (US$4.5 billion) - a record gain, excluding January and February figures, which are distorted by the Lunar New Year holiday. Sales of jewelry, watches and clocks soared 52 percent from a year earlier. Electronics sales rose 65 percent.
As well as the increase in sales value, volumes leapt over the first seven months, particularly July, the government said.
In the past two years, a gain in the value of the yuan of about 8 percent against the Hong Kong dollar, which is pegged to the US currency, has boosted the spending power of shoppers from the mainland.
Some of those visitors, including Lin, say items in Hong Kong are less likely to be counterfeit. In addition, they avoid the mainland's taxes on luxury goods.
The number of visitors from the mainland surged 33 percent to 2.68 million in July compared with a year earlier, according to figures from the Hong Kong Tourism Board.
Visitors from the mainland staying one night or more spent an average of HK$7,453 each per trip last year, the highest amount of any group, according to the board. The mainland also provided the top spenders in the same-day category at HK$2,356 each.
Bullish sentiment
Chow Sang Sang Holdings International, a Hong Kong-listed maker and retailer of jewelry, said its sales of gold accessories in Hong Kong and the mainland jumped 37 percent by weight in the first half of the year because of "pervasively bullish" sentiment even as the price of the metal soared.
Shares in the company, which operates on the mainland and in Hong Kong, Macau and Taiwan, are up 41 percent this year, compared with a 12 percent decline in Hong Kong's Hang Seng Index.
In Shanghai, Xu Qing, who coordinates tourist trips to Hong Kong for Shanghai Jinjiang Travel, said Apple products, such as the iPhone and iPad, are at the top of clients' shopping lists because they are available earlier in the city.
In July, Hong Kong reported its fastest inflation since 1995 as rising rents and food costs and changes to government housing subsidies boosted the rate to 7.9 percent.
HSBC's Kwok said she sees a risk that consumers will "eventually cave in" if inflation stays high and financial markets are turbulent.
Denise Yam, a Hong Kong-based economist for Morgan Stanley, said the strength of retail sales in July was "certainly a surprise" and the numbers for August and September may be weaker.
At Daiwa, analyst Kevin Lai predicted the city's economy will shrink 1.5 percent this quarter from the previous three months "due to weakening global demand and intensifying global financial turmoil."
The technical definition of a recession is two straight quarters of contraction. In the second quarter, the economy shrank 0.5 percent as export growth slowed.
Lin, who is a saleswoman, emerged from the Louis Vuitton outlet empty-handed, saying that as a frequent visitor she was not in a rush to buy and would continue her search elsewhere.
"I know nothing about Hong Kong's economy, but it seems to me it must be doing well - the shops that we visit are always so crowded."
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