This page has been archived and commenting is disabled.
60% Of Retail Sales Growth In Hong Kong Was Due To The iPhone 6
The impact of the Apple juggernaut on earnings is already well known: as Reuters previously calculated, following the announcement of Apple's results earlier this week, S&P 500 Q4 revenue growth tripled to 1.4% from 0.5% the day before; while if one excludes AAPL S&P500 revenue growth falls to 0.8%.
But what about the impact of Apple on macroeconomics? For a good example we look at Hong Kong Q4 retail sales. As a reminder, in Q4, the Hong Kong economy was substantially impacted due to the Occupy Central movement peaking (and then suffering the same fate as its US peer, when it faded into obscurity), and many predicted the domestic economy would tumble if only until the impact of the city stoppage washed away.
As it turns out, most of those predictions were correct, however one place where pessimism was unfounded was in retail sales. The reason: the Apple iPhone 6.
UBS explains:
The launch of the popular iPhone 6 by Apple in September 2014 was the biggest, and perhaps the only, positive driver for Hong Kong's retail sector during late 2014. Thanks largely to Apple, retail sales grew better than expected at 3.5%y/y in value terms during September and November 2014, despite the temporary disruption from the 'Occupy Central' demonstration. The sales of iPhone, which are captured in other consumer durable sales, grew on average 60%y/y since September, propelled predominately by the launch of new product.
Excluding iPhones, retail sales value would have contracted almost 1%y/y in October, at the peak of the 'Occupy' movement, and expanded a more subdued 1.3%y/y during Sep-Nov 14 (see figure 1). In other words, over 60% of retail sales growth was attributable to iPhone in late 2014.
The strong demand for iPhone has mostly come from the Chinese tourists. The iPhone 6 was launched about a month earlier in Hong Kong (19 September versus 17 October in China). And the selling prices of which are also lower here, making the arbitrage trade profitable (buys in HK; sells in China). Those who live in Hong Kong will be very familiar with the long queues snapping up the phone as well as the big crowds outside the Apple stores trying to make a quick profitable trade.
This explained why tourist arrivals (over 80% of them Chinese) accelerated to 13%y/y during Sep-Nov 14, bucking the 'Occupy Central' disruption, as the timing of which happened to coincide with the iPhone euphoria. The incentives to buy the gadget before the Chinese launch or to gain from arbitrage trade have attracted many Chinese tourists since September. Most of them are day trippers. This is reflected in the average 18%y/y expansion in same-day visitor arrivals since September, which is up from 13.6%y/y in the three months before the iPhone launch. Overnight visitors, however, continued to ease and expand at mid-single digit pace (see figure 2). In particular, non-Mainland Chinese tourist, mostly overnight visitors, contracted in 4Q14. Both the share and, more recently, the absolute level of non-Chinese arrivals have been shrinking. As far as tourism is concerned, Hong Kong can hardly claim to be Asia's world city anymore.
In other words, if anything were to ever happen to the Apple "magic", not only does the S&P get it, but the macroeconomic ripple across the entire world will likely lead to a mini-recession all of its own.
»
- 5511 reads
- Printer-friendly version
- Send to friend
- advertisements -
Sum ting wong
If you wanted to be witty regarding China, then a double-entendre in Yue Yu or Han Yu would be more in your favour.
As it stands you just appear to be an American who speaks one language and travels rarely.
Hu Hascashtotravel
60% Of Retail Sales Growth In Hong Kong Was Due To The iPhone 6
Anyone here ever been to Hong Kong? It's the real Island of Tortuga (pirate island) from Pirates of the Carribean. All that sales growth is stolen money
Ho Ree Sheet, u white.
Everyone will buy another one next quarter, right? Right?!
Sadly yes, they probably will!
I lost my ding-dong in Hong Kong with poontang
Apple products are far stronger than crack to their followers!
It is amazing to watch, no doubt they would give up their first born just to be first in line.
jeez banzai yr photography sucks. give it up bro!
The electronic revolution has had an amazing effect on 'retail' in general, and is responsible for dramatic shifts in spending habits of consumers. It is one of the reason for the demise of many Mom & Pop stores, and some big ones chains, too.
Any connected gadget comes with a continuous maintenance cost. Your computer requires software and the ongoing updates, plus ink, paper, etc. Now, most are hooked up to the Internet, which presents it's own monthly bill. When portable phones started reaching critical mass, everyone got a new monthly ding. Add gaming, music, video streaming, and all kinds of extra services, and the money flowing from the consumers pockets grows exponentially.
Since wages are not increasing, the money has to come from somewhere. This means that many retail categories that were once healthy are now struggling and greatly diminished. Just look at all the closed shops. Adapt or die is the name of the game in retail, but there is only room for so many gadget sellers, and the impact on communities and society overall is really immeasurable. Young people in general are vastly different consumers today that their parents were.
not at all misleading
iPhones like gold flows to where the wealth is
Just makes me wonder How many millions of iPhone 6 crates it takes to use as insulation in Chinese Ghost City High Rises?