Pro-democracy protests in Hong Kong could hit the sales of luxury goods makers as mainland Chinese tourists shun the region and buy their expensive items elsewhere, analysts warned.
Big discounts on items such as watches and handbags had typically attracted mainland Chinese visitors to spend on luxury in Hong Kong, where they make up 70 percent of purchases. But disruption from the protests has exacerbated a long-term trend of declining Chinese visitors to Hong Kong which will affect top luxury companies.
"The impact of the Hong Kong protests for luxury goods has been that they have created a climate in which mainland Chinese nationals feel uncomfortable, and as such curtail or cancel their travel to Hong Kong," Bernstein Research said in a note on Friday.
Richemont, Swatch to suffer
Richemont, owner of high-end watch brands like Piaget, and Swatch, which has Omega among several watch brands in its portfolio, are most exposed with nearly 20 percent of sales in Hong Kong. A 20 percent hit to luxury buying would impact both these brands with a near 4 percent sales decline in the second half of 2014, Bernstein Research analysis showed. Luxury clothing brands would fare better.