Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Friday, Mar 24, 2023

Opening of borders no silver bullet for Hong Kong’s retail sector: economists

Opening of borders no silver bullet for Hong Kong’s retail sector: economists

Economists predict 10-15 per cent bump in retail sales for first quarter of year, an increase not as big as hoped, as residents account for most foot traffic and spending in malls.

Hong Kong economists do not expect a return of “revenge spending” following the reopening of the city’s borders with mainland China, as more people left than arrived over the Lunar New Year holiday.

Economists on Wednesday predicted a 10 to 15 per cent bump in retail sales for the first quarter of this year, compared to the same period in 2022 when the city was battling its fifth wave of the coronavirus pandemic.

More people have left Hong Kong than arrived in recent weeks. Immigration data showed a net outflow of 395,619 people between January 8, when quarantine-free travel with the mainland resumed, and Tuesday.

From January 18 to Tuesday, 793,823 people departed Hong Kong, compared with the 455,853 who entered, most of them residents, according to official data.

Travellers arrive in Hong Kong from mainland China at Shenzhen Bay.

On Sunday, the first day of the Year of the Rabbit, Hong Kong welcomed 10,082 visitors from the mainland, 54 per cent of the total number of arriving non-residents. The number was lower than the daily average of the past seven days, which stood at 12,962.

A quota of 50,000 travellers a day at the four land border checkpoints was raised to 65,000 for four days from last Wednesday to cope with an expected surge in demand over the holiday.

People travelling between the mainland and Hong Kong are required to show a negative result from a polymerase chain reaction (PCR) test taken within 48 hours of departure.

The city logged 2,295 new Covid-19 cases on Wednesday, taking the tally to 2,864,607. Twenty-seven related deaths were also recorded, taking the total to 13,230.

Sun Hung Kai Properties executive director Maureen Fung Sau-yim, who manages 15 of the group’s malls in Hong Kong, said her portfolio saw footfall increase by 25 per cent and sales by 30 per cent higher between January 19 and Wednesday from a year ago.

Residents accounted for 90 per cent of the shopper traffic and mainland visitors made up the rest, she added.

“Some local people shopped for skiing gear, down jackets and new apparel before travelling,” she said. “We expect more mainland tourists will come back.”
Sun Hung Kai Properties executive director Maureen Fung.

Gary Ng Cheuk-yan, a senior economist with Natixis Corporate and Investment Bank, said the border reopening with the mainland had not created a “very big positive catalyst” for the retail industry, with most spending coming from residents.

He expected a rebound in retail sales of around 15 per cent in the first quarter compared to the same period last year.

But he warned there would not be a “sudden revenge spending story” and it would take until the second half of the year for a boost in retail sales.

“The real improvement will come from the third quarter, because it will take time for tourists to come back to Hong Kong, and then we will have to see whether people get used to this high interest rate environment,” Ng said.

Simon Lee Siu-po, co-director of the international business and Chinese enterprise programme at Chinese University, agreed a 15 per cent increase in retail sales could be expected, but pointed to travellers having to undergo a PCR test as a major hurdle for mainland visitors.

A weak Chinese yuan made it expensive to shop in Hong Kong compared with buying products online from Japan or South Korea, he added.

“Tourists will gradually come back only after Lunar New Year, but with no miraculous effect [on retail sales] as they can buy online or buy from agents with Hong Kong products being expensive,” said Lee.

However, Terence Chong Tai-leung, an associate professor of economics at Chinese University, pointed out that around 20,000 visitors from mainland and overseas arrived every day during the Lunar New Year holiday, which was five times more than two months ago.

Economists are expecting a growth in retail sales for the first quarter of this year, compared to the same period in 2022, when the city was battling its fifth wave of the coronavirus pandemic.

He estimated tourists spending a week in the city could spend around HK$10,000 (US$1,275), including accommodation.

He estimated the growth in retail sales in the first and second quarters compared to the same period last year would be within 10 per cent, with the third and fourth exceeding 10 per cent.

Last November, retail sales fell 4.2 per cent from a year earlier, dropping to HK$29.5 billion (US$3.8 billion) and marking the largest monthly dip since March, when retail sales fell 13.8 per cent.

Retail sector lawmaker Peter Shiu Ka-fai urged the government to continue to hand out consumption vouchers to support Hong Kong residents as the city would not see an immediate return of tourists during the first half of the year.

He did not set a target for the vouchers, saying an amount ranging from HK$3,000 to HK$10,000 would be acceptable.

“Tourists will not come immediately, and the economy has been weak for three years,” he said.

Legislator Doreen Kong Yuk-foon said the city should rely on tourists to boost the economy after the pandemic rather than giving out vouchers to promote internal consumption.

Hong Kong has downgraded its full-year economic forecast for 2022 from between 0.5 per cent growth and 0.5 per cent contraction to a 3.2 per cent drop amid a recession, citing a deteriorating external environment and the Covid-19 pandemic.

The gross domestic product (GDP) fell by 4.5 per cent in the third quarter of last year from 2021, following a 1.3 per cent decline in the previous three months.


Related Articles

Hong Kong News
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
The US government has charged Chinese businessman Guo Wengui with leading a $1 billion fraud scheme that cheated thousands of followers out of their money.
Credit Suisse to borrow $54 billion from Swiss central bank
The BBC problem about China
Russian Hackers Preparing New Cyber Assault Against Ukraine
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
If this was in Tehran, Moscow or Hong Kong
Announcing GPT-4
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
A brief banking situation report
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
A primitive judge in Australia sparked outrage when he told a breastfeeding woman to leave his courtroom for being “a distraction"
Barcelona is feeling the heat as they face corruption charges over payments to former vice-president of Spain's referees' committee, Jose Maria Enriquez Negreira
Banking regulators close SVB, the largest bank failure since the financial crisis
Silicon Valley Bank: Struggles Threaten Tech Startup Ecosystem"
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Old clip of Bill Gates saying Ukraine is a big, fat, corrupt sinkhole is going viral
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
2 universities in Hong Kong embrace use of ChatGPT, other AI tools
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
Missing Chinese banker was working to set up Singapore family office
Hong Kong ditches Covid mask mandate after 945 days
Xi Jinping and His Wife Meet with Cambodian King Norodom Sihamoni and Queen Mother Norodom Monineath Sihanouk
How do stolen goods end up on Amazon, eBay and Facebook Marketplace?
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
Spain officials quit over trains that were too wide for tunnels...
Hello. Here is our news digest from London.
Corruption and Influence Buying Uncovered in International Mainstream Media: Investigation Reveals Growing Disinformation Mercenaries
When it comes to Tesla vs Lamborghini, an empty vessel makes more noise
European MP Clare Daly condemns US attack on Nord Stream
Former U.S. President Carter will spend his remaining time at home and receive hospice care instead of medication
North Korea test-fires an intercontinental ballistic missile into the Sea of Japan west of Hokkaido