Hong Kong consumer confidence ranks second after Beijing

Michelle Leung

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Consumer confidence levels rose slightly in Hong Kong in the first quarter of 2009, placing it behind Beijing but above Macau and Taiwan, according to a survey conducted by City University of Hong Kong (CityU).

CityU jointly announced the results of the new Chinese Consumer Confidence Index in Beijing on 16 April, together with Capital University of Economics and Business, Central University of Finance and Economics, Fu Jen Catholic University, Taiwan, and Macau University of Science and Technology.

The 2009 first quarter results in Beijing, Hong Kong, Macau and Taiwan, from a possible highest score of 200, were 99.7, 78.8, 75.4 and 49.1 respectively. (Refer to Table 1)

Hong Kong Consumer Confidence Index is a component of the CityIndex to be launched by CityU to reflect the overall social and economic situation in Hong Kong. The consumer confidence index is an integrated index measuring consumer sentiment towards economic development, employment, consumer prices, living standards, housing sales and stock investment. It reflects consumer perceptions over a designated period about the current and expected social and economic climate.

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The index uses a scale of 0 (representing no confidence) to 200 (complete confidence) to represent ascending levels of consumer confidence. Scores below 100 suggest people are lacking confidence while scores above 100 reflect relative confidence.

For the past three quarters the overall Hong Kong Consumer Confidence Index has been below 100, reflecting Hong Kong consumers’ general lack of confidence in all six measured areas. The first quarter index this year increased 2.6 points to 78.8, higher than the 2008 fourth quarter, when the global financial crisis arrived. (Refer to Table 2)

Dr Geoffrey Tso Kwok-fai, Associate Professor of CityU’s Department of Management Sciences who carried out the survey, said the results showed that Hong Kong people were stepping out of the shadow of the financial meltdown.

“The global financial tsunami that arrived in September last year swept away consumer confidence. The consumer confidence index in Hong Kong dropped from 88.4 to 76.2 in the fourth quarter of 2008. Though the economy has not yet fully recovered, consumer confidence in Hong Kong improved slightly in the first quarter this year, perhaps because people believe the worst has passed,” he said.

Hong Kong consumers were most confident in living standards, which scored 104.3 in the 2009 first quarter. They were, by contrast, least confident in employment, which has now recorded three straight drops since the 2008 third quarter to 56.5. Hong Kong’s worsening unemployment rate was reflected in this result.

Confidence in the property and stock markets improved. The confidence index for house purchases increased from 82.0 to 84.6 and stock investment from 73.0 to 78.1.

CityU has coordinated the Hong Kong Consumer Confidence Index since the third quarter of 2008. The research team collects views quarterly from more than 1,000 Hong Kong residents aged 18 or above using a computer-assisted telephone interview system.

Table 1: 2009 first quarter consumer confidence index results in Beijing, Hong Kong, Macau and Taiwan

Category

Beijing

Hong Kong

Macau

Taiwan

Economic development

115.9

65.4

77.5

42.3

Employment

91.6

56.5

68.3

35.4

Consumer prices

98.2

83.9

77.6

39.9

Living standards

122.7

104.3

97.3

45.3

Purchase of housing

82.3

84.6

59.6

79.7*

Stock investment

87.3

78.1

72.1

52.2

Consumer Confidence Index (overall)

99.7

78.8

75.4

49.1

*The survey in Taiwan covered all “durable goods”.

Table 2: Results for the past three quarters of the Hong Kong Consumer Confidence Index

Category

2008 third quarter

2008 fourth quarter

2009 first quarter

Economic development

83.3

63.7

65.4

Employment

96.5

60.1

56.5

Consumer prices

95.6

80.7

83.9

Living standards

103.9

97.6

104.3

Purchase of housing

72.9

82.0

84.6

Stock investment

78.3

73.0

78.1

Consumer Confidence Index (overall)

88.4

76.2

78.8

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