Hong Kong Consumers Confidence In the Economy Highest in 10 Years

Confidence About the Overall Future of Hong Kong On Average

Spending Desires On the Rise Yet Travel Intention Softened

2 February 2005
Hong Kong

Besides the fast approaching Chinese New Year, there must be other reasons backing up the prevailing strong consumers confidence in Hong Kong. According to the latest ACNielsen Hong Kong Consumer Confidence Index, the positive market sentiment in Hong Kong since 2004 not only sustained in the beginning of 2005 but also brought the confidence level to a score of 99, the highest ever in 10 years.

First established in 1980s, the ACNielsen Hong Kong Consumer Confidence Index is conducted every quarter gauging consumer confidence in the economy, their purchase intentions for big-ticket items and their confidence in the future of Hong Kong. The Index is released regularly in February, May, August and November every year.

Confidence in the Economy
Conducted in mid January among 1,016 consumers aged 15-54, the latest Consumer Confidence Index scored 99, up from 97 in the same period last year. It reflected a noticeable shift of Hong Kong people’s confidence in their personal financial situation where 25% of the people surveyed felt that their personal financial situation will improve in the next 12 months, a 6 percentage points over the same period in 2004 (See Table 1). In addition, 13% of Hong Kongers gave a thumb-up to the current local economic situation with the majority felt it was “average”. Although it’s worth noting that overall people seemed to be cautious about a continued upswing of the economy - only 46% believed the economy will continue to improve in the coming 12 months with more believed it be the same as it is (See Table 2).

“This is probably due to the fact that Hong Kong’s economy has improved significantly over the past 15 months with most economic indicators performing positively, it is not surprising that people would see it harder to grow continuously unless there would be more solid and positive news further stimulating the economy.” said Ms Amy Lee, Director ACNielsen Customised Research. “However there was a clear sign of optimism amongst consumers judging by how they felt about their personal financial situation.”

Zooming into the various segments of Hong Kong consumers, males, young adults aged 15-24, and the middle class with monthly household income of HK$12,000 - $26,999 were three more optimistic groups in terms of their positiv economic outlook of Hong Kong and their personal financial situation.

Table 1: Confidence in the Personal Financial Situation in the Next 12 Months

Table 2: Hong Kong Economic Outlook in the Coming 12 Months

Purchase Intentions
Driven by the continued positive market sentiment and the shopping-spree atmosphere around the city backed by the increased tourist volume, especially travelers from the Mainland since 2004, Hong Kong people seemed to be fast catching up with the spending desires. As the latest Index reveals, local people’s shopping intention for big ticket items like furniture, major household appliances, vehicles and apartments etc continued to climb and reached a score of 102, up by 2 points from the last quarter.

“The purchase intention index for Hong Kong people is rising at a slower rate although the the current level not only represented a 6-point increase over the same period in 2004 but better still, it is also as high as the 1997 level; more people claimed to be spending at the same level as they have been, with less said they would continue to tighten their purse strings,” Ms Lee added. “Obviously the fast approaching Chinese New Year and the past Christmas have heightened the spending desires. However having experienced the worse time in the past years, Hong Kong consumers while willing to spend now, have become much smarter spenders and would shop for the best value.”

Taking into considerations of all aspects, Hong Kong people’s confidence about the future of Hong Kong has maintained at a score of 86, a two-point increase from the same period last year.

When asked specifically about their spending and travel intentions before and during the Chinese New Year, on average people plan to spend HK$2,276 on pre-holidays grocery shopping including foodstuff, plants and gifting and the actual budget seemed to be in proportion to one’s household income. As to the “lai-see pool”, on average people indicated to put aside $2,624 for lai-see giving, where 9 in 10 said it would be about the same budget as last year and 7% said it would be less than that of last year. In terms of value for each packet, 69% claimed to give $20 each and 7% would give more than $50 each – good news for the children and singles.

Subsequent to the Tsunami incident in South Asia on the past Boxing Day, the travel desires among Hong Kong people seemed to have softened with less than a third indicated plans to travel aboard during the upcoming Chinese New Year holidays. “For those whose travel plans have not been affected, the appetite may have shifted from the Southeast to the Mainland,” Ms Lee added. “And the budget set aside for travel doesn’t seem to have shrunk though.”

Accordingly 73% of those who have plans to travel claimed to be visiting the Mainland China with Guangzhou (18%) and Shenzhen (11%) in particular the most popular destinations of all. Macau where tourism and entertainment business are booming since 2004, has also captured the mind of 12% of Hong Kong tourists especially those aged 25-34! Other places where Hong Kong people planned to visit during the Chinese New Year include Korea (5%), Japan and Taiwan (4% respectively) and Bangkok (2%).

The average spending on holiday travel will be HK$9,320 although where it would benefit varies by who the spenders are. For male travellers they seem to be more willing to spend on travel/accommodations ($6,900) while females were typically more generous to themselves on shopping with their planned spending of $2,970 on average. Again the spending amount varies according to individuals’ income level as the findings evidenced.

About ACNielsen
ACNielsen, a VNU business, is the world’s leading marketing information company. Offering services in more than 100 countries, the company provides measurement and analysis of marketplace dynamics and consumer attitudes and behaviour. Clients rely on ACNielsen’s market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns.