July retail sales to slip 3.5% as tourists scramble away

Watches and jewellery sales to slump significantly.

July retail sales values are projected to fall 3.5% YoY versus 6.9% in June.

According to a research note from DBS, in particular, sales of watches and jewellery are expected to shrink significantly on the back of falling tourist arrivals and an ongoing anti-corruption campaign in China.

Retail sales of popular tourist items dropped 27.7% YoY in 2Q, faring much worse than locals’ retail sales (proxy), which eked out 4.1% growth in the same period.

Here’s more from DBS:

The retail sales outlook is rather gloomy.

Locals’ spending will limit the drop in headline figures as consumer confidence improves on the back of a property market revival and better equity market performance.

But the overriding factor is that retail sales typically slow alongside growth moderation in China.

When China’s growth slowed to a trough of 7.4% back in 3Q12, Hong Kong’s retail sales growth spluttered.

The same is happening recently.

But unlike last time, China’s growth will not pick up anytime soon.