Morgan Stanley released a research report indicating that Hong Kong's retail sales in September rose 5.9% year-on-year to HKD 31.3 billion, surpassing the bank's forecast of 2% growth and the market consensus of 2.6%. The positive growth in recent months suggests the market may be bottoming out.

The report noted that cumulative retail sales for the first nine months of the year saw a further narrowing decline to a 1% year-on-year drop. Morgan Stanley has revised its full-year forecast to a 2% decline, up from an earlier expectation of a 5% drop. Despite a 11% year-on-year increase in mainland visitors in October, the bank maintains a conservative stance due to increased outbound travel in Q4 and rising unemployment potentially impacting consumption.

Morgan Stanley highlighted that retail landlords such as WHARF REIC (01997) and HYSAN DEV (00014) could benefit, offering dividend yields of 1.7% to 2.7%, which are higher than the U.S. 10-year Treasury yield. The bank projects a 4% year-on-year increase in Hong Kong's October retail sales, primarily driven by the 8-day National Day Golden Week holiday boosting visitor numbers, though partially offset by increased outbound travel during public holidays.