Unexpectedly high retail sales in August offsets drop in July

Electronics sales should also rebound in September.

Hong Kong's retail sales value unexpectedly gained by 3.4% y-o-y in August--with the consensus at -2.0%--erasing the 3.2% fall in July.

According to a research note from Nomura, higher sales in food, alcohol & tobacco (+20.0% y-o-y), motor vehicles (+12.6%) and clothing & footwear (+5.7%) more than offset weaker sales in electronics (-10.5%) and luxury goods (-6.1%).

Meanwhile, for September, electronics sales should rebound due to the new iPhone6 launches in Hong Kong.

However, it was also noted that recent political unrest may have a negative impact on retail sales.

Overall, Nomura sees downside risks to its Hong Kong GDP growth forecast (2.5% in 2014 and 3.0% in 2015) owing to a potential housing market correction and political unrest.