Hong Kong June retail sales fall for 16th straight month (updated)

Shangri-La Asia

02/08/2016 10:18

* June sales of jewellery, watches, valuables down 20.4 pct 
y/y 
    * June tourists fall 1.7 pct y/y, mainland visitors down 3.8 
pct 
    * Retailers, travel agent all flag weaker performance 
 
    HONG KONG, Aug 2 (Reuters) - 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. 
    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. (http://bit.ly/2anEXnp) 
    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.  urn:newsml:reuters.com:*:nL3N1542JT 
    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  0011.HK  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  0308.HK  warned of a 69 percent 
fall in first-half profit hurt by yuan depreciation, and a 
weaker hotel business in Hong Kong and Macau.  urn:newsml:reuters.com:*:nL4N1A718Y 
    Chow Tai Fook Jewellery  1929.HK , 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.  urn:newsml:reuters.com:*:nL4N19X2DO   
    Smaller rival Chow Sang Sang  0116.HK  expects H1 profit to 
fall 50-60 percent from a year ago due to weak demand. 
 urn:newsml:reuters.com:*:nWNBS02P3V 
 
($1 = 7.7597 Hong Kong dollars) 
 
 (Reporting by Donny Kwok and Twinnie Siu; Editing by Anne Marie 
Roantree and Sam Holmes) 
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters 
Messaging: donny.kwok.reuters.com@reuters.net)) 
 
Keywords: HONGKONG ECONOMY/RETAIL