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Lagging Behind in Asia Pacific: Consumer Confidence Remains Low in Hong Kong

September 3, 2016 Destination North Asia No Comments Print Print Email Email

Following the significant deterioration in consumer confidence in the second half of last year, Hong Kong saw a further decline in optimism when it comes to economic prospects for the second half of 2016 with the lowest score in Asia Pacific, according to the latest Mastercard Index of Consumer Confidence. The Index and its accompanying reports should not be interpreted as indicators of Mastercard’s financial performance.http://www.rembrandtbkk.com/

Compared to the second half of 2015, overall consumer confidence in the city dropped 12.4 points to its lowest level (32.1) since 2012, coming out last amongst its peers in Asia Pacific. Although the youth segment (respondents aged 30 or below) were more confident in the overall economic outlook with a score of 38.7, compared to those aged over 30 (29.7), local consumers were generally pessimistic about the economy in Hong Kong.

Between June and July 2016, 8,746 respondents, aged 18 to 64 in 17 Asia Pacific markets, were asked to give a six-month outlook on five economic indicators including Employment, Economy, Regular Income, Stock Market and Quality of Life. The Index is benchmarked on a scale of 0 to 100, with zero being the most pessimistic, 100 the most optimistic and 50 being neutral.

While all five components recorded a drop in confidence levels, Employment was the key driver for the overall decline. According to the survey, Employment saw the most significant deterioration of 20.9 points to 22.6 points, the lowest since the second half of 2009, reflecting Hong Kong consumers’ pessimistic outlook on their employment prospects. Apart from Employment, they also felt more pessimistic about the Economy (-11.7), the Stock Market (-12.1) and their Quality of Life (-10.2) compared to the previous survey. On the contrary, local consumers were still quite optimistic about their Regular Income, though confidence levels have shown slight deterioration (-7.0) compared to the second half of 2015.

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

  H1
2011
H2
2011
H1

2012

H2
2012
H1
2013
H2
2013
H1
2014
H2

2014

H1

2015

H2

2015

H1

2016

Employment 70.4 25.7 58.0 56.9 54.0 57.2 63.6 38.9 57.9 43.5 22.6
Economy 66.4 19.9 41.3 47.0 42.3 45.2 43.6 27.1 46.1 28.3 16.7
Regular Income 80.6 59.4 78.8 83.6 77.1 77.0 76.5 64.7 81.6 72.3 65.4
Stock Market 79.1 23.3 39.4 63.9 48.7 55.0 57.8 45.2 80.0 39.4 27.4
Quality of Life 46.3 21.1 41.8 43.1 33.3 32.5 30.6 28.7 40.6 38.5 28.3
MasterIndex 68.6 29.9 51.8 58.9 51.1 53.4 54.4 40.9 61.2 44.4 32.1
                       
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 38.7
Respondents aged over 30 68.9 26.0 49.6 60.1 50.6 53.8 56.5 35.7 59.8 42.5 29.7

In Greater China, while China (76.0) retained its top position in terms of consumer confidence, Taiwan, which experienced extreme deterioration of more than 20 points in the second half of 2015, recorded the largest gain of 16.3 points to 45.3 points. This increase was backed by an improvement in all components, which was led by heightened expectations in stock market movements (+24.6).

As for Asia Pacific, overall consumer confidence in the region remained stable with a negligible increase from 59.67 points to 59.72 points in the first half of 2016, sitting just below the 60 point “optimistic mark” in the neutral territory. Emerging markets such as India (97.6), Vietnam (94.9), Myanmar (99.8) and the Philippines (95.2) remained resilient with consumers expressing optimism about economic prospects over the next six months.

“Global economic issues have led to a drop in confidence among local consumers across various economic aspects for the months ahead. In light of all the external uncertainties, it is encouraging to see Hongkongers continuing to demonstrate optimism towards their regular income prospects, while consumer confidence in Asia Pacific remained steady and neutral,” said Hiang Choong, division president, Hong Kong, Macau & Taiwan, Mastercard.

Mastercard Index of Consumer Confidence H1 2016

H1 2016 Current Status Change from last half
Asia Pacific 59.72 Neutral + 0.05 Stable +
Australia 42.2 Neutral – -0.1 Stable –
China 76.0 Very Optimistic 1.4 Stable +
Hong Kong 32.1 Pessimistic -12.4 Significant Deterioration
India 97.6 Extremely Optimistic 7.5 Some Improvement
Indonesia 61.8 Optimistic -14.7 Significant Deterioration
Japan 38.0 Pessimistic -8.8 Some Deterioration
Korea 34.2 Pessimistic 0.4 Stable +
Malaysia 41.4 Neutral – 9.5 Some Improvement
New Zealand 55.4 Neutral + 3.4 Stable +
Philippines 95.2 Extremely Optimistic 12.9 Significant Improvement
Singapore 33.6 Pessimistic -10.7 Significant Deterioration
Taiwan 45.3 Neutral – 16.3 Significant Improvement
Thailand 58.2 Neutral + -8.5 Some Deterioration
Vietnam 94.9 Extremely Optimistic 0.7 Stable +
Myanmar 99.8 Extremely Optimistic 4.0 Stable +
Bangladesh 71.6 Optimistic 4.3 Stable +
Sri Lanka 38.0 Pessimistic -4.2 Stable –

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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