2012-07-12

Guangdong slows; jewellery sales slump

Friday morning pre-GDP news:

Guangdong growth alert for mainland
Guangdong Governor Zhu Xiaodan on Wednesday conceded that the provincial economy grew a "weaker than expected" 7.4 per cent in the first six months of the year. Exports grew only 6.9 per cent, a slowdown which is already spilling into the second half. Zhu told his subordinates to have "a higher level of crisis awareness" as other key economic indicators, such as fixed asset investment, retail sales, and the government's fiscal revenue were worse than anticipated and were below national averages.
Guangdong is one of the faster growing provinces, although the article quotes predictions of 7.7% GDP growth for all of China in Q2.

Elsewhere, I warned that China has a gold bubble because investors are very speculative, treating the metal like a hot stock.
Sales decline hits jeweller's shares
Chow Tai Fook said in a filing on Wednesday night that same-store sales in its Hong Kong and Macau stores dropped 1 per cent for the three months to June, despite a 5 per cent increase in volume. This is a sharp decline compared with the 48 per cent growth in same-store sales recorded for the fiscal year to March.

"While the weakness may not be totally unexpected, the reported sales growth and same-store growth were still notably below the market and our estimates," said Catherine Lim, an analyst with Citi Research.

...A spokeswoman at the Hong Kong Retail Management Association said mainland consumers have cut spending on jewellery, apparel and cosmetics in their shopping trips to Hong Kong this year.

To deal with the challenging market environment, Cheng said the company had adjusted the product mix to meet consumer demand.

Chow Tai Fook has expanded aggressively across the border in recent years, which has strained its cash flow.

The retailer received net proceeds of HK$15.4 billion in its initial public offering but said it held only HK$10 billion in cash at the end of March.

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