During the seven-day National Day Golden Week, Hong Kong welcomed approximately 1.4mn mainland visitors, accounting for 89% of total arrivals and marking a 9.4% YoY increase, exceeding government expectations. The Mid-Autumn Festival holiday also saw strong visitor arrivals, with the number of visitors on the day up nearly 30% YoY. This strong growth in tourist traffic boosted retail spending demand across key tourist districts, while the extended holiday period allowed for longer stays and higher per capita spending. Furthermore, industry surveys suggested that about 70% of member retailers and restaurants recorded single to low-double-digit YoY growth, supported by tourist traffic. Cosmetics, gold and jewelry, and apparel all registered double-digit YoY growth, with cosmetics outperforming other sectors.

Cosmetics retail outperforms on social media marketing

Cosmetics retail sales are showing sustainable recovery. Sa Sa International (178.HK) reported more than 60% YoY growth in offline sales in Hong Kong and Macau during Golden Week, while same-store sales (SSS) rose by more than 50% YoY. The number of transactions, average transaction value, and average items per transaction all recorded significant YoY increases. The company attributed the growth to social-media-driven demand for viral products such as facial masks, trendy cosmetics, and perfumes. In addition, Sa Sa reported 52% YoY growth in offline sales in Hong Kong and Macau during 2Q27 (July to September this year), benefiting from favorable tourist footfall and consumption sentiment during summer holiday.

High-end malls show strong willingness in consumption

Major shopping malls also recorded robust performance during the holiday. K11 Musea, a large-scale mall in Tsim Sha Tsui operated by New World Development (17.HK), recorded 12% YoY increase in foot traffic, while tourist spending rose 26% YoY.  These strong results were partly driven by its ongoing brand upgrade strategy, with international brands such as Alo Yoga, HOKA, Prada, and Miu Miu opening new stores in Q3. Member spending in the athleisure category surged nearly 3x YoY while spending on luxury brands rose by 75% YoY and fashion apparel spending grew 25% YoY, indicating that high-end consumers remained willing to spend.

Festive promotions at major malls also successfully captured spending. Sino Group (83.HK) ran large-scale themed events and reward programs during the Golden Week, including a beauty-themed promotion at Tuen Mun Town Plaza.  The promotion drove tenant sales and lifted beauty merchants' turnover by 10% to 15% YoY.

Gold retail expects volume growth favored by gold prices

Gold retailers saw customer traffic increase by 20% to 30% YoY, with sales expected to grow by double-digit YoY. This growth was supported by a 25% pullback in gold prices from their peak in January this year as well as a weaker HKD.

Our view:

With consumption softness persisting in Greater China, major holidays such as the National Day Golden Week have become key indicators of Hong Kong's consumption dynamics, as consumers tend to concentrate spending during holiday periods.  This provides insight into purchasing power and consumer preferences under current macro headwinds. The solid growth in tourism related spending during Golden Week highlights resilient demand for frequently used, relatively low-ticket products such as cosmetics, as well as premium products targeting high-spending consumers. 

Within Hong Kong’s retail sector, we prefer Sa Sa (178.HK, HK$1.30, HK$4.10bn), which has maintained strong sales growth momentum by capitalizing on the recent recovery in tourist spending in Hong Kong and resuming its presence in tourist districts in recent months. The stock is currently trading at 14.5x FY27E P/E, respectively. (Amelia Deng)