Protesters take the shine off Golden Week
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.