Yesterday, JPMorgan released a report stating that the impact of Sam's Club on Hong Kong's retail market is controllable and is expected to capture less than 1% of Hong Kong's overall retail sales. However, the bank is cautious about Hong Kong's retail performance and expects annual sales (excluding dining) to decline by 6%. JPMorgan believes that the impact of Sam's Club on the Hong Kong retail market is controllable because its product supply is limited, such as not being able to send snacks and drinks to Hong Kong temporarily. In addition, many price-sensitive consumers have already turned to cross-border platforms such as Taobao and PDD for shopping. Moreover, although the unit price of Sam's Club products is low, most of them require bulk purchases at once, and Hong Kong consumers may need to pool and share with others. Also, Hong Kong's small living space hinders them from repeating purchases of Sam's products.

Despite JPMorgan's view that the threat from Sam's Club is small, it still believes Hong Kong's retail market faces four major unfavorable factors, including an increase in the number of outbound trips by Hong Kong people, further penetration of online shops, lower-than-expected tourist consumption, and exchange rates. Non-essential sales are expected to decline by 9% annually, while essential sales will drop by 2%. The bank reiterated its bullish view on Link REIT and holds a cautious attitude towards Wharf REIC.