China’s consumers regain some lost lustre

Trip.com

07/10/2024 04:54

(The author is a Reuters Breakingviews columnist. The opinions expressed are
her own.)
    By Katrina Hamlin
       HONG KONG, Oct 7 (Reuters Breakingviews) - Investors panning for
consumption bright spots in the world's second-largest economy will find a bit
of good news from this year's Golden Week. Average daily cross-border travel is
forecast to rise 19% from last year, above pre-Covid volumes, per official
estimates. Gamblers have also returned to Macau. More middle-class spending will
stir hopes that Beijing's stimulus might gain traction.
    Wealthier travellers were definitely on the move. On the very first day of
China's week-long holiday celebrating the founding of the People's Republic,
trips abroad rose 40% from last year, HSBC research noted. Long-haul flights
topped pre-pandemic levels, online travel agency Trip.com's  9961.HK  advanced
bookings showed, including a 30% spike in European travel. International
travellers spent 120% more using accounts enabled through an international card,
according to mobile-wallet service Alipay
    Meanwhile, in Macau the numbers of visitors from the mainland rose 6% from
2019 levels during the first three days of the break, per CLSA. Total wagers in
the so-called premium mass segment - the higher-end of the mass market - hit a
record high even though bets per person were slightly down, according to a Citi
survey, thanks to the overall volume of guests.
    These early trends indicate China's middle class may be more willing to
loosen their purse strings than previously thought. Amid slowing growth and a
property downturn, domestic demand has remained anaemic for much of the year:
retail sales rose only 2.1% in August, missing analyst forecasts of 2.5%.
Indeed, in Hong Kong, once a popular destination for mainland shoppers, the
city's Retail Management Association said the number of visitors from across the
border during Golden Week was “like a normal weekend”. The mainland box office,
another closely-watched indicator during the holiday, was slower than last year,
with ticket sales hitting the 1 billion yuan ($143 million) mark a day later
than in 2023.
    The mixed data suggests that consumption may be perking up in certain
pockets of the population. Spending habits are also changing, as travellers
eschew splurging on material goods in favour of experiences, Alipay suggested.
    Still, Beijing will be grateful for even a partial revival. Right before the
holidays, officials unveiled a sweeping package of monetary and property easing
measures, and signalled more to come. Hopes of a significant fiscal spending
have fuelled a 25% rally in Hong Kong's benchmark index. Signs that China's
consumers are regaining some confidence will help add to the momentum.
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    CONTEXT NEWS
Outbound travel rose around 40% year-on-year on Oct. 1, the first day of a
week-long public holiday to mark China’s National Day, according to online
bookings agency Trip.com data cited in an HSBC research note.
    The number of visitors coming to Macau on Oct. 1 to Oct. 3 was 478,713, 5%
higher than in 2019, and more than a fifth above last year’s levels, according a
note from CLSA on Oct. 4. The number of mainland visitors was up 6% over the
same period.
    China reported a record number of trips on its railway network on Oct. 1,
the first day of the holidays, Bloomberg reported on Oct. 2.
    Long-haul flights were set to increase compared to pre-pandemic levels in
2019, Trip.com said on Sept. 25, citing their advanced bookings.  

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Graphic: Chinese consumers' confidence hovers near a record low    https://reut.rs/3YaAA74
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 (Editing by Robyn Mak and Aditya Srivastav)
 ((For previous columns by the author, Reuters customers can click on
 HAMLIN/ katrina.hamlin@thomsonreuters.com; Reuters Messaging:
katrina.hamlin.thomsonreuters.com@reuters.net))