Boston, MA -- (SBWIRE) -- 04/02/2013 -- Executive Summary

The Hong Kong Retail Report examines the long-term potential of the local consumer market, but flags short-term concerns about the impact on Hong Kong's economic outlook of the struggling property market as prices become even more overstretched.

The report examines how best to maximise returns in the Hong Kong retail market while minimising investment risk, and also explores the impact of a weakening global and, more crucially, Chinese economy on the Hong Kong consumer and on the ability of producers and exporters to realise returns in the short term. The report also analyses the growth and risk management strategies being employed by the leading players in the Hong Kong retail sector, as they seek to maximise the growth opportunities offered by the local market.

Hong Kong comes fifth out of seven in BMI's Asia Retail risk/reward ratings, although it outperforms significantly for risk.

Among all retail categories, over-the-counter (OTC) pharmaceuticals will be the outperformer through to 2017 in growth terms, with sales forecast to increase by 30% between 2013 and 2017, from US$0.34bn to US$0.44bn as locally involved companies take advantage of growth in the mainland Chinese drug market.In the competitive arena, BMI sees upside potential in the government's cost-cutting initiatives, which will benefit the generic drugs sector, and the strategic framework for the prevention and control of noncommunicable diseases, which should stimulate prescription and patented segments.

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Over the last quarter, BMI has revised the following forecasts/views:

- With the downturn in the real estate market in mind, BMI has downgraded its forecasts for Hong Kong's real GDP growth. We now see 2012 growth in the city slowing from a previous estimate of 2.2% to 1.6%. This remains below consensus' projection of 2.5% and close to the midpoint of the government's recently revised forecast range of 1.0% to 2.0%. Our 2013 forecasts have also been revised downward to 2.5% from a previous estimate of 3.5%.
- The expected slowdown in Hong Kong's consumption story is starting to kick into full force. Retail sales, in terms of both value and consumption, are now printing single-digit growth figures, down sharply from an average 22.0% over 2010 and 2011. We expect the falling trend in consumption spending to extend into 2013 as recessionary pressures continue to mount and an expected uptick in unemployment starts to materialise. For these reasons, BMI is forecasting private consumption to grow 4.5% in 2012, before slowing to 3.0% in 2013, contributing 2.8 percentage points (pp) and 1.9pp respectively.

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