The last few weeks have seen Hong Kong's Hang Seng index surge over 14% which – if one believes the mainstream media – must mean renewed confidence in world economic growth and that everything is awesome. However, that narrative just got destroyed as Hong Kong retail sales in February just crashed by the most since 1999 as fewer Chinese tourists visited the city during the Lunar New Year holiday and as one analyst warned, sales will "continue to fall for the rest of 2016 as all the negative factors won’t be solved in the near term."
As Bloomberg details, retail sales dropped 21 percent in February to HK$37 billion ($4.8 billion) year on year, according to a statement from Hong Kong’s statistics department. Combining January and February, sales fell 14 percent.
The monthly decline is the worst since January 1999 when sales were also down 21 percent.
“Apart from the severe drag from the protracted slowdown in inbound tourism, the asset market consolidation might also have weighed on local consumption sentiment,” a government said in a statement on Thursday. “The near-term outlook for retail sales will still be constrained by the weak inbound tourism performance and uncertain economic prospects.”
Chow Tai Fook Jewellery Group Ltd., the world’s largest-listed jewelry chain, and Sa Sa International Holdings Ltd. reported slumping sales over the holiday when mainland Chinese tourists to the territory dropped 12 percent during Feb. 7-13. The stock market rout and a slowing Chinese economy have affected consumer sentiment for luxury goods, Chow Tai Fook has said.
Sales of jewellery, watches and clocks, and valuable gifts dropped 24 percent, while those of electrical goods and photographic equipment plunged 27 percent, according to Thursday’s statement.
The government will monitor closely its repercussions on the wider economy and job market, it said, but as Bloomberg adds,
Mainland China tourists “are unlikely to come back in the short term,” said Forrest Chan, an analyst at CCB International Securities Ltd. Hong Kong residents are also consuming less due to stagnant property values and the weak stock market, he said.
“Hong Kong’s retail market will continue to fall for the rest of 2016 as all the negative factors won’t be solved in the near term,” Chan said in a telephone interview.
via Zero Hedge http://ift.tt/1RQgGI5 Tyler Durden