HONG KONG, 31 May, 2016 – Hong Kong first quarter consumer confidence index has fluctuated to a subdued note of 88 points, according to the Nielsen Global Survey of Consumer Confidence and Spending Intentions. Globally, consumer confidence has remained stable and below the optimism baseline at an index of 98. Within the region, consumer confidence in Hong Kong is higher than that of Taiwan (76) and Japan (73). It is the same as Singapore but lower than China (105).
The Nielsen Consumer Confidence Index measures perceptions of local job prospects, personal finance and immediate spending intentions. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.
“The continued drop in mainland visitors is impacting retail sales, which were down 12.5% in the first quarter, and people have job security top of mind,” said Angel Young, managing director, Nielsen Hong Kong and Macau. “High-end discretionary items, such as jewellery and consumer durable goods, reported the biggest hit; however, food and supermarket sales, which are daily necessities driven by the domestic market, were better able to sustain.”
Nielsen revealed that Hong Kong consumers are holding a more cautious view about the current economic outlook, as indicated by three drivers: the state of their personal finance (optimism down from 57% in Q4 2015 to 42% this quarter), job prospects (from 45% to 22%) and spending intentions (from 47% to 41%).
Opportunities amidst this challenging economic outlook
Despite a seemingly challenging outlook, the economy of Hong Kong still has a number of opportunities where growth is likely to continue, as shown by resilient domestic consumption, continued Mainland tourism, and opportunities for Hong Kong businesses to reach mainland consumers through better online strategy and platform.
According to Nielsen’s findings, 41% of Hong Kong consumers claimed that their willingness to spend is good or excellent. After covering their essential living expenses, the top three areas where consumers will direct their spare cash are “putting into savings”, “out-of-home entertainment” and “holidays and travel”. Among which, “out-of-home entertainment” and “holidays and travel” sustained in past quarters. This indicates consumers’ continued pursuit of quality of life.
“If we look at Hong Kong consumers’ spending overseas, it actually represented an increase of 14% in Q1 vs last year. Local consumers are willing to spend, what it takes is marketers to drive innovation and attract domestic consumers to spend locally,” said Young.
Besides spending, local consumers remained strong in their investment appetite. Two-out-of-five (41%) respondents have invested in shares and mutual funds, among the top investors globally as indicated in the global survey.
In terms of Mainland tourists, despite the decline, they still represent six times the local population. Their estimated spending represents HK$143 billion business. Hong Kong is still considered as the top travel destinations for mainlanders for shopping and investment purposes. Two-fifths of Mainland respondents claimed that the top reason for shopping in Hong Kong is convenience (43%), and guarantee for genuine products (41%). In another financial study amongst mainland visitors, 73% have optimistic or very optimistic sentiments towards Hong Kong finance. 38% expressed that their main purpose for coming to Hong Kong is for cross-border financial needs.
“Lastly, if we look beyond our local and tourist population, with the rapid development of online shopping amongst 1.4 billion Chinese consumers, there is tremendous potential for Hong Kong brands to tap into the opportunity in e-commerce. Hong Kong continues to be an important gateway into China, the key is for businesses to explore changing consumer needs and better market to emerging trends,” Young concluded.
About the Nielsen Global Survey
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted March 1–23, 2016, and polled more than 30,000 online consumers in 63 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample includes Internet users who agreed to participate in this survey and has quotas based on age and sex for each country. It is weighted to be representative of Internet consumers by country. Because the sample is based on those who agreed to participate, no estimates of theoretical sampling error can be calculated. However, a probability sample of equivalent size would have a margin of error of ±0.6% at the global level. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The sub-Saharan African countries in this study are compiled from a separate mobile methodology survey among 1,600 respondents in Ghana, Kenya and Nigeria. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.