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Consumer Sentiment Declines: Hong Kong Shows Weakened Economic Confidence

March 24, 2016 Destination North Asia No Comments Email Email

For the first time since late 2012, Asia Pacific consumers in general no longer feel optimistic about the immediate future. Hong Kong’s consumer confidence, in particular, moved from optimistic into neutral territory following a significant deterioration in confidence compared to the first half of 2015, according to the latest MasterCard Index of Consumer Confidence for the second half of last year.

Overall consumer confidence in the city (44.4) has dropped 16.8 Index points compared to the previous half, with deterioration being seen across all economic indicators of the Index, including Employment,Economy, Regular Income, Stock Market and Quality of Life.

Among the five indicators, local consumers were most pessimistic in their outlook on the Economy (28.3), with the most substantial fall (from 80.0 to 39.4) in confidence in the local Stock Market. Nonetheless, Hongkongers were still quite optimistic about the outlook of their Regular Income (72.3) despite a slight decline in confidence in this regard (from 81.6 to 72.3). In terms of Employment and Quality of Life, expectations also fell from 57.9 to 43.5 and 40.6 to 38.5 Index points respectively, showing a relatively negative sentiment among local consumers in these areas.

The youth segment in Hong Kong (respondents aged 30 or below) was no exception. The latest data indicated that they were less confident in the overall economic outlook compared to the first half of 2015 (from 64.4 to 50.8). However, their confidence level still surpassed that of respondents aged 30 or above who showed a relatively negative sentiment towards the local economic environment (42.5).

Hong Kong’s Index of Consumer Confidence over the Past Five Years

  H1
2011
H2
2011
H1

2012

H2
2012
H1
2013
H2
2013
H1
2014
H2

2014

H1

2015

H2

2015

Employment 70.4 25.7 58.0 56.9 54.0 57.2 63.6 38.9 57.9 43.5
Economy 66.4 19.9 41.3 47.0 42.3 45.2 43.6 27.1 46.1 28.3
Regular Income 80.6 59.4 78.8 83.6 77.1 77.0 76.5 64.7 81.6 72.3
Stock Market 79.1 23.3 39.4 63.9 48.7 55.0 57.8 45.2 80.0 39.4
Quality of Life 46.3 21.1 41.8 43.1 33.3 32.5 30.6 28.7 40.6 38.5
MasterIndex 68.6 29.9 51.8 58.9 51.1 53.4 54.4 40.9 61.2 44.4
                     
Respondents aged 30 or below 71.2 31.4 58.1 55.8 52.7 53.1 48.7 57.9 64.4 50.8
Respondents aged over 30 68.9 26.0 49.6 60.1 50.6 53.8 56.5 35.7 59.8 42.5

At the regional level, Asia Pacific saw an overall deterioration (from 66.1 to 59.7) in consumer confidence, with eight of the 17 surveyed markets in the region being below the 50 neutral line compared to four in the first half of last year. According to the survey, pessimistic outlook on the Stock Market (from 62.8 to 52.0) was the key driver of the deterioration in the region, followed by Employment (from 66.8 to 59.8). Singapore (44.3), for example, moved from optimistic into neutral territory after falling 20.9 Index points as a result of extreme confidence deterioration in the Stock Market (from 63.6 to 30.8), Economy (from 66.8 to 39.9) and Employment (from 60.4 to 40.4). On the contrary, emerging markets such as Myanmar (95.7), Vietnam (94.2) and India (90.2) are highly optimistic about their economic outlooks.

In Greater China, China remained optimistic across all economic aspects despite deteriorated confidence compared to the first half of last year, facing a fall of only 15.1 Index points in Stock Market in face of the volatility in the Chinese stock market since mid-2015. In contrast, Taiwan experienced extreme deterioration in consumer confidence (from 49.6 to 28.9) and obtained the lowest score in the region as well as Asia Pacific. Similar to Hong Kong, Taiwan suffered from the most significant decrease in confidence in the Stock Market (28.4) among all the economic indicators in this survey.

Anna Yip, head of Hong Kong and Macau, MasterCard, said, “Amid the continued uncertainty in the global economic environment as reflected by the general decline of consumer confidence in Asia Pacific, it is encouraging that Hongkongers still demonstrated an optimistic outlook on their regular income. In particular, we are pleased to see local youth hold a relatively neutral view on the Hong Kong economic environment despite a drop in the overall optimism level.”

The latest MasterCard Index of Consumer Confidence (“Index”) is based on a survey conducted between November and December 2015 on 8,779 respondents aged 18 to 64 in 17 markets across Asia Pacific. This is the 46th survey of Consumer Confidence conducted since 1993.

MasterCard Index of Consumer Confidence H2 2015

H2 2015 Current Status Change from last half
Asia Pacific 59.7 Neutral + -6.4 Some Deterioration
Australia 42.4 Neutral – 2.9 Stable +
Bangladesh 67.3 Optimistic -8.0 Some Deterioration
China 74.6 Optimistic -11.3 Significant Deterioration
Hong Kong 44.4 Neutral – -16.8 Significant Deterioration
India 90.2 Extremely Optimistic -2.9 Stable –
Indonesia 76.5 Very Optimistic 12.2 Significant Improvement
Japan 46.9 Neutral – -9.7 Some Deterioration
Korea 33.8 Pessimistic -6.2 Some Deterioration
Malaysia 32.0 Pessimistic -13.0 Significant Deterioration
Myanmar 95.7 Extremely Optimistic 14.1 Significant Improvement
New Zealand 52.0 Neutral + -5.7 Some Deterioration
Philippines 82.3 Very Optimistic 0.9 Stable +
Singapore 44.3 Neutral – -20.9 Extreme Deterioration
Sri Lanka 42.2 Neutral – -25.2 Extreme Deterioration
Taiwan 28.9 Pessimistic -20.6 Extreme Deterioration
Thailand 66.6 Optimistic -6.1 Some Deterioration
Vietnam 94.2 Extremely Optimistic 7.3 Some Improvement

 Methodology 

Respondents were asked five questions pertaining to their six-month outlook on the economy, their employment prospects, the local stock market, their regular income prospects, and their quality of life. The results of their responses were converted in five component indexes which were subsequently averaged to form the MasterCard Index of Consumer Confidence (MICC) score. The MICC Index score and the 5 component index scores range from 0 – 100 where 0 represents maximum pessimism, 100 represents maximum optimism and 50 represents neutrality.

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