Hong Kong retail sales growth picks up in Oct, headwinds cloud sentiment

Luk Fook Holdings (International)

30/11/2018 10:44

* Oct retail sales value up 5.9 pct y/y, volume up 5.2 pct
y/y
    * Jan-Oct retail sales value up 10.6 pct y/y, volume up 9.1
pct 
    * Oct tourist arrivals rise 11.5 pct y/y, Jan-Oct up 9.7 pct
    * External headwinds, weak asset markets to affect sentiment
-govt

    By Donny Kwok and Twinnie Siu
    HONG KONG, Nov 30 (Reuters) - Hong Kong's retail sales
growth picked up in October from the prior month, government
data showed on Friday, but consumer sentiment could be
increasingly clouded by weak asset markets and external factors
like the U.S.-China trade war.
    Retail sales in October rose 5.9 percent from a year earlier
in value terms to HK$39.7 billion ($5.08 billion), marking the
20th month of expansion, helped by a rise in visitor numbers and
continued income growth. That compares with a 2.4 percent rise
in September.
    Strong inbound tourism, especially from China, favourable
job and income conditions continue to support the sector, a
government spokesman said.
    "Consumer sentiment could increasingly be affected by the
external uncertainties and weaker asset markets," he said.
    In terms of volumes, retail sales grew 5.2 percent in
October, compared with a 1.4 percent rise in September. 
    "We are very conservative and are not very optimistic over
the performance for Q4," said Annie Yau Tse, chairwoman of the
Hong Kong Retail Management Association. "We see flat growth in
Q4 as the negative factors begin to affect the market."
    Tse expects a high single-digit growth in retail sales in
2018, and a low single-digit growth for 2019.
    Despite this, two major infrastructure projects linking
China and Hong Kong; a high-speed railway and a sea-bridge to
Zhuhai and Macau, are expected to boost Chinese visitor numbers
and the retail sector in the longer run, some analysts say.
    Hong Kong's economic growth slowed further in the third
quarter and is expected to face additional headwinds amid
U.S.-China trade tensions and higher interest rates.
 urn:newsml:reuters.com:*:nL4N1XR269
    China, meanwhile, delivered a mixed economic report card for
October, with domestic consumption starting to slow amid
mounting household debt, while the real estate sector - a major
driver - continues to cool.  urn:newsml:reuters.com:*:nENNIB80TC urn:newsml:reuters.com:*:nL4N1XP1KA
    October tourist arrivals to Hong Kong rose 11.5 percent from
a year earlier to 5.88 million, according to the Tourism Board.
The count of mainland visitors grew 15.4 percent, accounting for
79.1 percent of the total. https://bit.ly/2U0YoXQ
 
    Sales of jewellery, watches, clocks and valuable gifts
increased 3.3 percent in October, the data showed.
    Growth in medicines and cosmetics rose 14.9 percent from a 
4.9 percent rise in September, while department store sales were
up 3.5 percent against a revised 1.7 percent rise in September.
    Cosmetics chain Sa Sa International  0178.HK  saw a sharp
rise in first-half profit but warned of weak sentiment.
 urn:newsml:reuters.com:*:nFWN1XW05O
 ($1 = 7.8213 Hong Kong dollars)

 (Reporting by Donny Kwok and Twinnie Siu; Editing by James
Pomfret and Gopakumar Warrier)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))