Zhi Tong Cai Jing·2026-01-05 06:42Core Viewpoint - Morgan Stanley reports that Hong Kong's retail sales value increased by 6.5% year-on-year in November, maintaining a moderate recovery trend similar to October's 6.9% growth [1] Retail Sales Performance - Non-essential goods outperformed essential goods, with a growth of 11% compared to 2% for essential items, primarily driven by a strong 39% increase in electronic products [1] - Excluding electronics, the retail sales value still showed a year-on-year increase of 2.1% in November, down from 3.2% in October [1] Market Sentiment and Forecast - The slight slowdown in November retail sales may be partially attributed to the emotional impact of the fire at Hong Fu Court in Tai Po at the end of November [1] - The forecast for December retail sales is expected to show low to mid-single-digit growth, indicating a slight slowdown, as the strong momentum in electronic products may diminish [1] - The year-on-year growth of inbound travelers in December is also expected to slow slightly, with ongoing effects from the Tai Po fire impacting consumer sentiment [1] Economic Factors Supporting Retail - Retail consumption is anticipated to continue benefiting from (1) the wealth effect driven by the stock and property markets, and (2) the depreciation of the Hong Kong dollar [1] Company Ratings - Morgan Stanley maintains a constructive view on Wharf Real Estate Investment Company (01997), rating it as "Overweight," due to signs indicating that non-essential retail is emerging from a trough [1] - Conversely, a "Neutral" rating is maintained for Link REIT (00823), as supermarket sales in Hong Kong fell by 2% year-on-year in November, indicating ongoing competition from cross-border e-commerce platforms like Pinduoduo (PDD.US) [1]