Pro­test­ers take the shine off Golden Week

CityPress - - Business -

Re­tail­ers of Fendi bags and Rolex watches in Hong Kong are fac­ing a preChrist­mas night­mare as pro-democ­racy protests wreak havoc dur­ing one of the busiest times of the year, the China Na­tional Day hol­i­days known as Golden Week.

Demon­stra­tors are oc­cu­py­ing shop­ping ar­eas from Cause­way Bay to Tsim Sha Tsui, dis­rupt­ing trans­port, shut­ting stores and test­ing the pa­tience of Chi­nese tourists who ac­counted for 75% of the city’s 54 mil­lion vis­i­tors last year.

Chi­nese tourists have turned the for­mer Bri­tish colony into the world’s largest mar­ket for Swiss watches and a ma­jor source of in­come for lux­ury brands. The protests, rag­ing dur­ing what is typ­i­cally the big­gest shop­ping sea­son for in­com­ing main­land vis­i­tors, are now threat­en­ing to ex­ac­er­bate Hong Kong’s slump­ing sales of jew­ellery, watches and other valu­able gifts, which are headed for their big­gest an­nual drop in at least a decade.

Luca Solca, an an­a­lyst at Ex­ane BNP Paribas, said the protests amount to an “in­creas­ingly ad­verse trad­ing de­vel­op­ment in Hong Kong as ar­rivals from main­land China plum­met and dis­rup­tions keep lo­cals away from stores”.

“The es­ca­la­tion in Hong Kong de­serves full in­vestor at­ten­tion,” said Solca.

Golden Week is im­por­tant be­cause re­tail­ers in the city typ­i­cally gen­er­ate about 40% to 60% of their Oc­to­ber sales dur­ing that pe­riod, ac­cord­ing to Ray­mond Ye­ung, an economist at Aus­tralia & New Zealand Bank­ing Group.

Some com­pa­nies have ac­knowl­edged the head­winds this year. Swatch Group, which makes Omega time­pieces, has been ex­pect­ing “tur­bu­lences” in Hong Kong, ac­cord­ing to CEO Nick Hayek.

Moët Hen­nessy Louis Vuit­ton, Guc­ciowner Ker­ing and Prada have cited Hong Kong as an area of con­cern.

Ac­cord­ing to Iris Fan, an an­a­lyst at Fore­cast Pte in Sin­ga­pore, the protests prob­a­bly caused Hong Kong’s over­all Septem­ber re­tail sales to fall by be­tween 4% and 8%, and this month will likely see a sim­i­lar de­cline.

The demon­stra­tions and sit-ins that be­gan last week have paral­ysed parts of cen­tral Hong Kong as tens of thou­sands of peo­ple – many of them stu­dents – op­pose the Chi­nese gov­ern­ment’s plans for the city’s 2017 lead­er­ship elec­tions.

The pro­test­ers are also de­mand­ing the res­ig­na­tion of Hong Kong chief ex­ec­u­tive Le­ung Chun-ying.

Chow Tai Fook Jew­ellery Group, the world’s largest jew­ellery chain, ear­lier in the week closed 30 of its out­lets be­cause of the protests.

– Bloomberg

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