Citi: Hong Kong's annual retail sales are expected to recover to HK$400 billion, with preferred options being Swire Properties and New World Development.

Citi released a research report stating that the retail sales value in Hong Kong increased by 7.9% year-on-year in May, at the upper end of the bank's previous expectation of 5% to 8% growth. This growth was mainly driven by a 26% increase in sales of jewelry, watches, and precious gifts, as well as an 8% increase in the number of visitors during the Golden Week and the depreciation of the Hong Kong dollar against the Renminbi. The bank expects that although the weakening of the capital markets in June may temporarily suppress consumer sentiment, retail sales for the full year of 2026 are still expected to recover to HKD 400 billion. The bank pointed out that retail sales performance usually leads spot rental prices by 12 to 18 months, and spot rental prices in turn lead renewal rental adjustments by another 12 to 18 months. Therefore, after 13 consecutive months of growth in retail sales value, retail spot rental prices are expected to start recovering in the second half of 2026, supporting a return to neutral to positive renewal rental adjustments in 2027. In the local property sector, the bank's top picks are Swire Properties, Sun Hung Kai Properties, Cheung Kong Property Holdings, and Link Real Estate Investment Trust.