Retail Savings & Investments in Hong Kong: Coronavirus (COVID-19) Sector Impact

Retail Savings & Investments in Hong Kong: Coronavirus (COVID-19) Sector Impact

Summary

The Coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious Coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel Coronavirus a pandemic on March 11, 2020.

Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with key markets across the world losing 20-50% of their value for the year to date. Many economists and institutions have cut their forecasts, with consensus global GDP growth currently at 2.6% for 2020, and many experts predicting the potential onset of recessionary environments.

Anti-government protests and the US-China trade war shrunk the country’s economy by 1.2% in 2019 - the first contraction in 10 years. The battered economy will further plunge due to the effects of the Coronavirus outbreak. The country’s unemployment reached a nine-year high of 3.7% in February 2020.

This report focuses on the impact of the Coronavirus outbreak on the Hong Kong's economy and the country’s retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts GlobalData’s pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.

Scope

- Hong Kong retail savings and investments are forecast to contract by 0.8% over the course of 2020 as the economy has almost come to a complete standstill thanks to the impacts of COVID-19. Retail equity and mutual fund holdings are expected to take the brunt of the economy’s slowdown, with respective declines of 24.2% and 17.2% anticipated.
- Retail deposits and bond holdings, on the other hand, are set to fare better than initially expected courtesy of a flight to safety away from risk assets. However, more pronounced declines in risk asset holdings mean GlobalData’s total retail holdings forecast for 2020 is 1.1 percentage points (pp) lower than before the onset of COVID-19.
- The effects on the different segments that make up the HNW market will be disproportionate. The retail, fashion, and luxury industry which is the second-largest contributor to Hong Kong HNW wealth has been among the hardest-hit sectors as restrictions on movement and decreased spending power are taking a toll.
- The financial services sector the largest contributor to HNW wealth has also taken a hit (albeit to a lesser extent), as indicated by the 16% decrease of the Hang Seng Finance Index for the year to date.- The healthcare sector has held up more robustly, with the Hang Seng Healthcare Index having risen by 10% since the beginning of 2020.

Reasons to Buy

- Make strategic decisions using top-level revised forecast data on the Hong Kong's retail savings and investments industry.
- Understand the key market trends, challenges, and opportunities in the Hong Kong's retail savings and investments industry.
- Receive a comprehensive insight into the retail liquid asset holdings in Hong Kong, including deposits, mutual funds, equities, and bonds.