[ET Net News Agency, 16 July 2019] Morgan Stanley estimated Chinese tourists
contributed to 32% of HK retail sales in 2018, based on average tourist spending by
purpose. It cited a Hong Kong Tourism Board survey saying that Chinese tourists, on
average, spent 61% of their travel budget in HK (HK$7,000 per person) on shopping.
The research house expects that HK could see a 10% decline in retail sales in the medium
term, if that 30% of Chinese tourist spending is "re-shored' back to mainland China,
either to the duty-free market or onshore retail.
Among sales categories, Morgan believes cosmetics will be affected first. If China
continues to relax duty-free and import tariff policies, jewelry/watches as well as
fashion/accessories could be affected.
It said retail sales at Wharf REIC's (01997) "Harbour City" and "Times Square" had the
highest exposure to mainland tourists in 2018. Hence, China's duty free market development
is likely to divert Chinese tourists' discretionary spending from HK.
Morgan estimates that Chinese tourist spending at Hysan's (00014) portfolio is around
30-40%. (KL)