Hong Kong November retail sales dive, string of falls the longest in 13 years

The value of Hong Kong retail sales fell for a ninth consecutive month in November, the longest period of decline in 13 years, hit by a slide in the number of Chinese tourists coming to the city and by weak consumer spending. Retail sales plunged 7.8 percent from a year earlier, the biggest percentage drop since January 2015, to HK$38.1 billion ($4.92 billion). In volume terms, November sales fell 6.0 percent.
"This was mainly dragged by the further slowdown in inbound tourism," the government said in a statement. "The increased downside risks to economic outlook and recent stock market corrections might also have resulted in more cautious local consumption sentiment." Retail sales will likely be "still constrained" by weak tourism, it said, adding that local sentiment could be impacted by the uncertain economic outlook following the US interest rate hike.
Hong Kong is bracing for greater economic challenges as the prospect of a cycle of interest rate rises drives fears of capital outflows that could pressure the Asian financial hub. The economy is struggling as fewer cash-rich mainland tourists stream across the border on shopping sprees. The strong Hong Kong dollar, which is pegged to the US dollar, has made the city an expensive destination and China's cash-rich tourists are heading for more exotic destinations.
Total tourist arrivals dropped 10.4 percent in November from a year ago, the sixth consecutive month of decline. Mainland visitors, who accounted for 74 percent of November visitors, fell 15.5 percent in the month, the biggest percentage drop so far in 2015, according to Hong Kong Tourism Board data. December numbers are not available yet. Hong Kong's comparatively high rents and wages also hurt companies as fewer mainland Chinese tourists have come to the city to buy handbags, watches and designer clothing.
November sales of jewellery, watches, clocks and valuable gifts in value terms were down 20.6 percent, a 15th consecutive month of decline. There was a 17 percent drop in October and 22.9 percent fall in September. Department store sales slid an annual 4.8 percent, against a 2.2 percent drop in previous month, while clothing and footwear fell 8.5 percent, against a 4.6 percent slide in October. Last month, Italian fashion house Prada SpA reported a 38 percent fall in August-October profit, due to slumping sales in Greater China while a weaker Chinese yuan discouraged mainland tourist spending in Hong Kong.