"Hong Kong Retail Report Q2 2016" Published

Hong Kong's retail sector has been facing headwinds over the recent quarters owing to declining tourist and spending figures from mainland China. Although we expect this negative trend to persist in the near term, we forecast 2016 headline household spending to increase 6.6% y-o-y supported by stronger domestic consumption and rising levels of disposable income.

Key Views & Developments

Purchases by foreigners are expected to remain subdued in 2016 as mainland China continues to face economic headwinds and the yuan weakens in line with our forecast (CNY6.68/USD).

Luxury retailers in Hong Kong have been suffering dwindling sales in 2015 and are taking measures to minimise the losses. UK luxury-goods maker Burberry Group said it will scale back its biggest store in the city, while Hong Kong-based skincare and cosmetics retailer Sa Sa International is revamping its product offering as customers are buying cheaper creams and lipsticks.

Full Report Details at
- http://www.fastmr.com/prod/1118998_hong_kong_retail_report_q2.aspx?afid=302

Weak retail sales in Hong Kong drove down retail shops rents in core areas by 15.7% in Q1-Q3 2015. A real estate company CBRE expects that rents will continue to decline in the coming months, but at a milder pace with a forecast of a 20-25% drop y-o-y in 2015 and a 15% decline y-o-y in 2016.

In 2016, consumers will likely begin to feel the brunt of negative wealth effects as the residential property market heads into correction, in line with our long-held view that Hong Kong property prices have risen far beyond sustainable valuation levels ( see 'Property Market Plans Little Threat To Sound Fiscal Position ', October 2, 2015).

The Hong Kong Retail Report has been researched at source and features BMI Research's independent assessment and forecasts for the retail sector. The report examines key drivers of retail sales growth and future prospects, including consumer spending and private sector investment.

BMI's Hong Kong Retail Report also examines the level of development and potential for growth of the retail sector, the commercial initiatives of major players, changing consumer demographics that influence demand and the regulatory environment. Key sub-sectors include mass grocery retail, autos, over-the-counter pharmaceuticals, computers and consumer electronics.

Key Benefits
Benchmark BMI's independent retail industry forecasts for Hong Kong to test other views - a key input for successful budgeting and strategic business planning in the Hong Kong retail market.
Target business opportunities and risks in Hong Kong through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, plus a discussion of major industry developments and a snapshot of key short-term demand-driving macroeconomic movements.

Industry SWOT Analysis

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