Good news for Singapore retailers

Singapore retailers can expect higher expenditure from the sudden influx of Chinese tourists, if policy makers decided to tighten the yuan, several analysts said.

With a higher yuan, the country will be a less costly tourist destination for the Chinese, said Mr. Liu Jinshu, investment analyst at Sias Research.

"Chinese tourists already accounted for 9.7 per cent of total arrivals in 2009. With a stronger yuan, we can expect more visitors from China," he said.

Almost 72,000 Chinese tourists came to Singapore in May, making it the fourth-largest nation in terms of visitor arrivals.

The top three nations in terms of tourist arrivals in May are Indonesia with 186,000 visitors; India with 116,000, Malaysia with 82,000, and Australia taking fifth place with 64,000 visitors.

Mr. Liu explained that with most visitors coming from neighboring countries, the eurozone crisis is not a mounting concern.

"The euro zone debt crisis will have a relatively smaller impact on Singapore retail trade as a whole."

"Hence, our retailers are less reliant on European customers. Reduced takings from them will probably be more than offset by higher receipts from other nationalities and local spending," he said.

With the economy in Singapore hitting 15.5 percent growth on-year in the first quarter, retail sales not including motor vehicles increased only 7.4 percent in the same period.

However, Mr. Liu is sanguine on the retail sector for H2 2010, despite a slower performance compared to broad economic growth.

"I believe that consumption will increase towards the end of 2010, as employers become more willing to increase wages and bonuses in view of what I expect to be stronger profit numbers for 2010," said Mr. Liu.