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Chinas Retail Recovery Still Rests on Richer Consumers
Chinese
consumers are finally starting to spend again after the
pandemic-induced slump, but the recovery is unbalanced and overly
reliant on luxury goods, with poorer Chinese still cautious.To get more
news about WikiFX, you can visit wikifx official website.
Consumption
has started to catch up to the much stronger rebound in industrial
output, with retail sales growing in August for the first time this
year. Spending on luxury goods, cars and electronics is leading the
charge, rising faster than food, clothing and other essentials.
Source: National Bureau of Statistics, China Passenger Car Association, Gaming Inspection and Coordination Bureau of Macau SAR.
Note:
All data shows % change from previous year*Feb. values show combined
Jan.-Feb. data.While the supply side of Chinas economy has shown
resilience, a strong and broad rebound in spending is needed for a more
meaningful economic recovery. Even though the virus is under control,
income and job losses due to the pandemic have made poorer Chinese
unwilling or unable to increase spending, keeping a lid on the rebound.
“Higher-income
households have probably built up savings, because of the forced
reduction in consumption during lockdown, and could now be ready for a
spending spree. It is lower-income households that face a longer slog of
normalizing their finances,” He Wei, an analyst at Gavekal Dragonomics,
said in a recent report.
What Bloombergs Economists Say...
“Consumer
confidence appears to be coming back even without a vaccine. This is
reflected in strong pickups in sales of non-essentials, such as
cosmetics and jewelry, in recent months. Improved sentiment and spending
at home in lieu of overseas trips should help support private
consumption.”Luxury spending in China will grow 20%-30% this year,
according to a report from Boston Consulting Group, but much of that
growth is going to come from consumers in the 50 largest and richest
cities. People in the other 2,206 cities bought only a quarter of all
luxury goods in April-July this year, and their spending was down 4%
compared with 2019, according to the report. One luxury where spending
hasnt rebounded is gambling in Macau, which is forecast to see an 81%
drop in revenue this year, according to Credit Suisse analysts led by
Kenneth Fong. Gaming in the city is traditionally a good indicator of
discretionary spending in China, but that came to a crashing halt in
February.
Travel is another sector where there‘s still a long way
to go to recover from the damage caused by the pandemic. Real-time data
from China’s 11-biggest cities shows that people are still somewhat wary
about going out via public transport.
Source: Weibo, data compiled
by Bloomberg. Shows seven-day moving average. 11 cities are Beijing,
Shanghai, Guangzhou, Shenzhen, Wuhan, Nanjing, Chengdu, Xi'an, Suzhou,
Zhengzhou, and Chongqing.
Korea Consumer Confidence Retreats on New Virus Wave, Curbs
Consumer
confidence in South Korea slipped for the first time in five months as a
jump in virus cases and tighter social restrictions made households
more pessimistic about the economys outlook.To get more news about WikiFX, you can visit wikifx official website.
The
consumer sentiment index fell to 79.4 in September from 88.2 the
previous month, the Bank of Korea said in a statement Friday. The 8.8
point decline was the largest since March when the country was reeling
from the first wave of the pandemic.
South Koreas economy showed
signs of recovery at the start of the quarter, but the early momentum
lost steam as daily virus case counts soared to hundreds in August.
While the government has avoided imposing an economy-wide lockdown and
instead opted for targeted restrictions, the flareup is still expected
to have a significant impact on consumption and services.
The virus
resurgence was a key factor when the central bank slashed its economic
outlook for this year to a 1.3% contraction in August, from an earlier
forecast for a 0.2% decline in May.
While South Korea has since
managed to bring down daily caseloads to a little over hundred from the
peak of more than 400 in August, health officials warn the upcoming
Chuseok holiday could reignite infections with increased gatherings.
Among
components of the headline index, households spending projections
dragged most, followed by expectations for income and their assessment
of the current state of the economy. Inflation expectations for the next
year rose 0.1 percentage point to 1.9%.
Million-Pound Home Sales Soar in U.K. as Rich Change Lifestyle
Sales
of U.K. homes costing over 1 million pounds ($1.3 million) doubled last
month, outperforming the rest of the market as wealthier buyers sought
more space following the Covid-19 lockdown.To get more news about WikiFX, you can visit wikifx official website.
Agreed
sales were 105% higher than a year earlier in August, compared to a 61%
increase in sales of less expensive properties, according to property
website Rightmove. Million-pound homes are also finding buyers 18 days
faster than in 2019.
U.K. real estate is booming after the lockdown
held back months of transactions. Demand is being further fueled by a
temporary tax reduction and the pursuit of lifestyle changes after the
pandemic.
Pricey properties outside of London are benefiting most.
Expensive homes jumped 244% in the largely rural county of Norfolk, 174%
in Wiltshire and 165% in coastal Cornwall.
“Demand in higher price
brackets is more responsive to external events,” said Tom Bill, head of
U.K. residential research at Knight Frank. “Buyers who are less
constrained by the mortgage market and negative sentiment around
unemployment and the economy have been able to act on their desire for
more space.