HONG KONG – Hong Kong is expected to report a drop in October retail sales on Monday, providing the first broad look at the impact of pro-democracy protests on core shopping areas after demonstrators blocked key roads and scared off mainland Chinese tourists.
Protests began choking parts of the Asia financial center in late September, disrupting business in one of the world’s key markets for luxury companies such as Prada SpA, Burberry and Gucci owner Kering.
Three analysts contacted by Reuters forecast falls in retail sales of 0.3, 0.5 and 4.4 percent from a year earlier. Citi bucked the trend, with a research note predicting a rise of 1.2 percent.
There have been annual declines most months this year, including a 6.9 percent tumble in June, blamed largely on a corruption crackdown in China that hurt Hong Kong purchases of luxury goods. But September retail sales grew 4.8 percent.
“The impact of the (protest) movement to the retail sales data should be the most serious in the first two weeks of October as things were most intense back then,” said Lily Lo of DBS Bank, who expects a fall of 0.3 percent.
China’s Golden Week holiday, which ended Oct. 7, is usually one of the year’s busiest shopping weeks, but scores of retailers said protests hit sales during the period, which began just days after police fired tear gas to disperse activists.
Some analysts said it was difficult to gauge the financial impact of the demonstrations because some shoppers may have shifted to other Hong Kong areas unaffected by the protests.
Dickson Concepts, operator of the Harvey Nichols department stores in Hong Kong, on Thursday became the latest company to flag an impact from the protests, saying the city’s retail market had further deteriorated as a result of the civil unrest.
That follows warnings from other Hong Kong-listed retailers such as Chow Tai Fook, the world’s largest jewellery maker by market value, and Luk Fook Holdings, a dealer for Audemars Piguet, Tag Heuer and other brands of watches.
Chow Tai Fook has said October same-store sales in Hong Kong fell 24 percent.
More than 100,000 people took to the streets at the height of the protests to demand greater democracy in Hong Kong, forcing some shops to close. Others, including Prada and domestic rival Tod’s, shortened business hours.
“When there were protests in Admiralty, we didn’t come here to shop. It was dangerous with all the unrest and nobody knew what was happening,” said a retired man surnamed Lam, referring to the key protest site next to government buildings.
Police on Wednesday cleared the protest site in the bustling shopping district of Mong Kok, but early Saturday there were clashes between activists and police. The main camp remains mostly intact in Admiralty, while a handful of demonstrators were still camped out in the Causeway Bay shopping area.
Luxury goods companies have already under been pressure from Beijing’s anti-corruption campaign, which has sapped appetites for such goods among mainland Chinese, some of Hong Kong’s biggest tourist spenders.
Hong Kong accounts for about $9.7 billion of global luxury sales, or 4 percent of the total, according to estimates by Bernstein Research.
The Hong Kong government has warned that prolonged unrest could threaten the city’s economic stability while economists say there is anecdotal evidence it has dragged on economic activity.
On Nov. 14, the government revised its 2014 economic growth estimate to 2.2 percent from 2-3 percent. At the start of the year, it saw 3-4 percent growth.
A private survey on business activity in October showed a sharp deterioration in operating conditions, with output shrinking at the quickest rate in nearly three years.
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