Jewellery and valuable gifts' retail sales dropped 17%

Their category once more suffers the worst.

Hong Kong’s retail market saw further deterioration before the Lunar New Year, amid a double-digit decline in visitor arrivals and weaker growth prospects in the local and Mainland economies.

According to a research note from Knight Frank, total retail sales value in December 2015 decreased 8.5% year on year, the deepest monthly drop since January 2015. Again, the “jewellery, watches and clocks, and valuable gifts” category suffered the biggest drop—17.0% year on year.

Here’s more from Knight Frank:

As sales declined, many luxury brands suspended the opening of new shops or downsized existing stores. Therefore, demand for small shops was relatively robust in core retail areas.

Meanwhile, the retail property sales market saw a number of arcade transactions last month. Looking ahead, the retail market will remain challenging in 2016 as the appreciation of the Hong Kong dollar against the RMB and other major Asian currencies, such as the Japanese yen, could further reduce Hong Kong’s attractiveness to visitors.

The weak job and stock markets may also harm consumer sentiment in the near term. We expect to see more big-ticket retail property sales transactions in 2016 as some developers and corporations offload part of their retail properties to deleverage their balance sheets in anticipation of future interest-rate rises.