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

Retail Savings and 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 most of the countries across the world registering declines in their economic growth for the year to date. Many economists and institutions have cut their forecasts as a number of countries officially slipped into recession in Q1 2020.

The Hong Kong economy was already exhausted before the outbreak of the pandemic. Weighed down by anti-government protests and the US-China trade war, the country fell into recession in 2019. The country’s economy shrunk 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.

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 the publisher'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 3.0% over the course of 2020 as the economy has almost come to a complete standstill thanks to the repeated resurgence in the number of cases of COVID-19. This has caused heightened volatility in the performance of stock markets, and we expect to continue to see low demand for risk assets until a vaccine is available. 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. According to the Hong Kong Monetary Authority, consumer deposits with institutions increased by 2.0% in June compared to May 2020. The issuance of Hong Kong dollar debt securities increased by 9.8% in Q2 2020 compared to Q1 2020. However, more pronounced declines in risk asset holdings mean our total retail savings and investments holdings forecast for 2020 is 5.6 percentage points 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 16.5% decrease of the Hang Seng Finance Index for the year to July 20, 2020.
• The healthcare sector has held up more robustly, with the Hang Seng Healthcare Index having risen by 35.4% since the beginning of the year until July 21 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.