Hong Kong Retail Sales Post Another Double-Digit Drop As Recession Worsens

Offering yet another reminder that the city’s economy has been reduced to a mere shadow of its former glory, Hong Kong retail sales have posted yet another double-digit drop as tourism continued to decline in November even as the pro-democracy movement started to fade from the front pages of Western periodicals.

By value, retail sales retreated 23.6% in November from the same period a year earlier, extending the city’s record-breaking run of declines to ten months. By volume, sales contracted by 25.4%. It’s the latest indication that Hong Kong’s economy is suffering from a worsening recession with no end in sight.

Source: Bloomberg

There was one bright spot, however: November’s decline was slightly better than the economists’ had expected, and slightly better than October’s record-breaking drop.

According to Bloomberg, the HK data serves as an ominous reminder that Hong Kong’s retailers, who once benefited from the city’s status as a premier tourist destination for most of Asia, are suffering the brunt of the economic fallout from the protests. And although the data for November came in slightly better than the consensus estimates, it’s still a major problem ahead of the release of data from the all-important December holiday shopping season.

The biggest source of the sales drop appears to be the sharp downturn in arrivals from mainland China, who have spurned the special autonomous region since protests first broke out in June. Visitors from the mainland plummeted 58% in November.

“Retail sales continued to fall sharply in November as the local social incidents turned extremely violent, causing very severe disruptions to tourism- and consumption-related activities and further dampening consumption sentiment,” a government spokesman said in a statement quoted by BBG. Notice the use of the vanilla “social incidents” to describe the protests, which have been deemed “riots” by the government in Beijing and supporters of Hong Kong Chief Executive Carrie Lam.

Meanwhile, overall visitors to HK plunged 56% YoY to 2.65 million during the month of November, the lowest reading since February 2011. It was the biggest monthly drop on record, according to the SCMP, the biggest English-language newspaper in HK.

That doesn’t bode well for shares of luxury-goods giants like LVMH (the new parent company of Tiffany & Co.), which have already been battered by Hong Kong’s troubles.

Hong Kong Financial Secretary Paul Chan Mo-po has warned that the special autonomous region of the People’s Republic of China should expect its economy to contract by 1.3% for the whole financial year thanks to the fallout from the protests, as well as the US-China trade war.