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10 August 2010
Hong Kong
While global consumer confidence index has continued to cautiously increase by one index point to 93 in the second quarter of 2010, Asian markets are booming but were offset by European consumers’ growing concerns of an escalating debt crisis. Hong Kong’s consumer confidence result continues to build on this momentum, up by two points in the second quarter of 2010 – breaking through the 100-point line for the first time since being hit by the global financial tsunami in Q3 of 2008, according to the latest Global Consumer Confidence Study conducted by The Nielsen Company.
Nielsen’s Global Consumer Confidence Study tracks consumer confidence, major concerns from consumers and spending intention among approximately 27,000 Internet users in 48 markets, between May the 10th and the 26th of May, 2010.
India (129 index points), Indonesia and Vietnam (both 119 index points) were the most optimistic nations during the second quarter of 2010, while consumer confidence in Spain plummeted by 10 index points to its lowest level ever recorded at 69 index points, which is a decrease from 79 points in the first quarter of this year.
Across Asia, major economies are experiencing growth headwinds in the form of higher inflation rates and asset price declines. While overall growth in China, India and elsewhere in Asia will still be strong, some slowdown can be expected - as governments and central banks tighten monetary and fiscal policies. Businesses therefore need to exercise more prudence in their resource allocation within Asia.
Drivers of Consumer Confidence in Hong Kong
“In tandem with a more positive outlook on job prospects and personal finances, consumers are opening their wallets for consumption and spending. Despite the unemployment rate increasing by 0.2 percent in the latest round, the stock market is stable and tourism numbers are also increasing, thus resulting in Hong Kong’s consumers ending the first half of 2010 on a buoyant note, with more consumers leaving the recession behind,” said Mr Oliver Rust, Managing Director, Hong Kong, The Nielsen Company.
The outlook for job prospects (56%) and the state of personal finances (63%) have seen strong growth rates of 4 percent in comparison to the latest quarter, coupled with a mild increase in consumers’ spending intent (44%) which increased by 1 percent; contributed to a more positive consumer confidence figure.
Major Concerns
Amid an improving market sentiment, The Economy (37%) remain as the main concern from Hong Kong consumers, yet people are more concerned about their health (28%) and work/life balance (25%) than job security (23%).
“Lessons learnt from the financial tsunami in Q3 2008 are still top of mind among many people in Hong Kong, while the economy is improving, people are still concerned about how long this improvement will last, or how to play it safe in case of another decline,” Mr. Rust explained. “Meanwhile, with an improving job market, Hong Kong consumers’ concerns about job security have significantly decreased from 43 percent as seen year ago, to 23 percent this time around.”
With government subsidies ceasing at end of 2009, consumers are more concerned about the increasing cost of utility bills (22%), which contributes to a fixed proportion of their daily household expense.
In the latest survey, the Economy (32%), Job Security (20%) and Health (20%) are the biggest concerns among global consumers.
Spending Habits: Savings and Stock Investments
Be it in good or bad times, saving for a rainy day continues to be the main priority for 49 percent of the world’s consumers when considering what to do with spare cash after covering essential living expenses. This sentiment was led by consumers in Asia.
Vacation (37%) and New Clothing (34%) are the top two most popular options for spending, seen in consumers across the globe. The desire to put spare cash into out-of-home entertainment (33%) strengthened along similar lines.
After covering essential living costs, Hong Kong consumers still prefer to put their spare cash into savings (72 percent).
“Amid a relatively stable stock market in comparison to a year ago, confident locals are more willing to open up their wallets to invest in stocks and shares (53%). Consumers in Hong Kong and China topped the list globally for being the most willing to spend their spare cash on investments,” Mr. Rust added.
According to survey results, consumers in Hong Kong are increasing their discretionary spend on vacations (+2 percent), out-of-home entertainment (+3 percent) and new clothing (+2 percent) from the last quarter. A definite sign of positive return for the retail sector.
The return of a confident economy can also be seen in the improvement in the online advertising market, given the increasing importance of online platforms being a significant marketing tool for advertisers. According to the latest AdRelevance report from Nielsen Online, the total advertising expenditure online has increased by 31 percent from HK$179million in Q2 2009, to HK$235million this time around, indicating that advertisers are confident enough to reinvest their money to meet the increasing demand from consumers.
“While the retail market has seen strong growth in the first 5 months of the year, with a year on year growth of 18.3 percent, fast moving consumer goods (FMCG) still remains stable, indicating that consumers are not increasing their spend on grocery items or daily necessities. However, we should not neglect the impact an influx of the tourists has, especially from Mainland tourists. Sales on jewelry and consumer durables are up by 39 percent and 29 percent respectively,” added Mr. Rust. “Although local consumers are opening their wallets on spending, we should be cautious about the local economy for its high dependency on spending from Mainland tourists.”
About The Nielsen Company
The Nielsen Company is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related assets. The privately held company is active in approximately 100 countries, with headquarters in New York, USA. For more information, please visit, www.nielsen.com.
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