5 reasons why Hong Kong will suffer weaker visitor spending

And trends will likely continue deteriorating.

Hong Kong retail trends are likely to continue to deteriorate on back of sustained weak visitor arrivals.

According to a research note from Barclays, this implies that the sector could be headed for structurally weaker growth for the next two to three years.

Hong Kong has seen weak tourist arrivals since March. This is in strong contrast to Global Blue data that showed that Mainland Chinese spending overseas was up 122% y/y in March.

Here's more from Barclays:

We expect that weak trends in visitor spending to continue given

1) negative sentiment for Mainlander visiting Hong Kong due to the recent protests;

2) depreciated currencies in other countries making travelling to other destinations more desirable;

3) the pricing gap between Hong Kong and China is already unattractive for some categories (e.g. handbags at just 14%);

4) changes to China's consumption taxes could further decrease Hong Kong's pricing advantage over China although we believe the magnitude of price gap change should be a single-digit percentage;

and 5) increased online competition.