Worrying trends persist in Hong Kong consumer confidence despite progress

The Consumer Confidence Index (CCI) for the cross-strait region, Hong Kong and Macau for the 4th quarter of 2019 announced on 8 January 2020 shows that the overall Hong Kong CCI was 68.7, down 14.9% year on year (YoY) but up 30.1% quarter on quarter (QoQ). 

Even though the overall index in the fourth quarter experienced a significant increase, it is still the second lowest point since the fourth quarter of 2008 when the index was launched. All the sub-indices are measured lower than 85, showing that Hong Kong consumers lack confidence.

Consumer confidence increases in two main aspects

There were significant increases in confidence levels in two main aspects: living standards and stock investments.

The sub-index of living standard measured at 83.5 (Table 1), which is a YOY drop of 11.3% but a significant increase by 39.4% from the previous quarter, making it the most confident aspect for Hong Kong people. The result for the current situation is 90.3 (Table 2), significantly increasing by 46.8% compared with the last quarter. Confidence in living standards for the coming three months is 78.9 (Table 2), significantly rising by 34.2% when compared with the last quarter. However, the absolute value of the future index is still low, which indicates that local consumers still worry about the situation.

The sub-index for stock investment is 67.3 (Table 1), with a YOY decrease of 14%, but a significant rise of 38.8% when compared with the previous quarter. The result for the present stock investment is 66.2 (Table 2), rising considerably by 42.1% from the previous quarter. People’s confidence in investing stock in the coming three months is 68 (Table 2), a significant increase of 36.8% compared to the former quarter. It indicates that consumers’ confidence level in this aspect has improved but it is still weak.

Overall index figures for other four aspects improves

The consumers’ confidence index has risen in the other four aspects: property purchases, commodity prices, employment and economic development.

The overall sub-index of 52.5 (Table 1) shows that Hong Kong residents still have the lowest confidence in property purchases. The index experiences a YOY decrease of 15.6% but a rise of 29.6% compared with the last quarter. The result for the current property purchases is 49.6 (Table 2), significantly increasing by 33.7% when compared to the former quarter. Citizens’ confidence in property purchases for the coming three months is 54.5 (Table 2), increasing by 27.6% on the last quarter. Even though the index has improved, that consumers’ confidence is still the weakest among the six aspects.

The overall commodity price index is 76.2 (Table 1), a YOY increase of 8.2%. Compared to the last quarter, it shows an increase of 26.3%. The current index of commodity prices is 63.5 (Table 2), with a rise of 16.5% when compared with the former quarter. The result for the coming three months is 84.7 (Table 2), rising by 31.7% on the last quarter. This indicates that Hong Kong consumers’ confidence level in this aspect has improved but it is still weak.

The sub-index of Hong Kong people towards employment is 67.2 (Table 1), a YOY decline of 26.2% but an increase of 23.5% compared with the result of the last quarter. The result for present employment situation is 67.4 (Table 2), growing by 19.1% on the previous quarter. The index for employment confidence in the coming three months is 67.1 (Table 2), with an increase of 26.8% when compared with the previous quarter. This indicates that locals’ confidence level in employment becomes higher. However, the absolute value of the index is low, showing that the consumers still worry about the employment situation.

The sub-index of Hong Kong residents towards economic development is 65.3 (Table 1), with a YOY decrease of 25.9% but a rise of 22.7% when compared with the previous quarter, showing that consumers’ confidence in economic development has improved from the previous quarter. The result for the present economic situation is 61.7 (Table 2), with an increase of 17.7% compared to the last quarter in this aspect. The result for the economic confidence in the coming three months is 67.7 (Table 2), with an increase of 26.1% compared with the previous quarter. However, the absolute value of the index is low, demonstrating that Hong Kong citizens still worry about the economic situation.

The overall result rose significantly compared with the result of the last quarter. This result is largely due to the improvement in consumers' confidence in two aspects: living standard and stock investments. Both of these sub-indices have risen by more than 38%. Even though the overall index in the fourth quarter experienced a significant increase, it is still the second lowest point since the fourth quarter of 2008 when the index was launched. It indicates that consumers’ confidence level is still very low. The situation may be caused by instability in Hong Kong’s political environment over the past months.

Media enquiries:

Dr Geoffrey Tso Kwok-fai
Associate Head, Associate Professor and Director of the Statistical Consulting Unit
Department of Management Sciences            
City University of Hong Kong
Tel: (852) 3442 8568 or (852) 9020 9996

Mr Hu Yijian
Research assistant 
Department of Management Sciences
City University of Hong Kong
Tel: (852) 3442 8657 or (852) 6350 2904

 
Appendix A: Notes for Data Collection
City University of Hong Kong is responsible for the data collection for the captioned investigation. The survey for the CCI in fourth quarter of 2019 was conducted by telephone interview from December 10, to December 31, 2019. A random sampling procedure was adopted, and 1,002 interviews were conducted with local residents aged 18 or above. The survey results have a 95% confidence level, and the sampling error is plus or minus 1.5 percentage points.

Appendix B: Notes for the Chinese Consumer Confidence Index
The Chinese Consumer Confidence Index was launched in the first quarter of 2009 and has been released on a quarterly basis since then. The overall consumer confidence score is an integrated index, measuring consumer sentiment about economic development, employment, commodity prices, standard of living, property purchases and stock investments. It reflects the confidence level of consumers in Mainland China, Hong Kong, Macau and Taiwan. The index is jointly compiled by Capital University of Economics and Business, the Central University of Finance and Economics, City University of Hong Kong, Macau University of Science and Technology, and Taipei Medical University.

The Chinese Consumer Confidence Index uses a scale of 0 to 200, with 0 representing “no confidence” and 200 representing “complete confidence”. If the index is below 100, it suggests consumers “lack confidence”, while if it is above 100, it suggests “relative confidence”.
 
Appendix C: Tables

Table 1. Results of the CCI index (Overall*)

*The overall index is a weighted index that combines the present and expected CCI.

Table 2. Results of the CCI (Present and Expected#)         

# Expected results in the next three months