Concerns Over Financial Hardship Easing for Some Consumers in Hong Kong Despite More Challenging Employment Conditions Brought About by COVID-19
- Latest TransUnion research shows “recovery factor” optimism gaining momentum amongst some consumers amid the promise of relaxation of COVID-19 control measures in Hong Kong
- While residents are facing increasingly challenging employment conditions, their concerns about paying their bills drops
- Majority of impacted Hong Kong consumers indicate they have not sought guidance in managing their finances in the difficult times ahead
TransUnion (NYSE: TRU) today announced the latest update to its regular Hong Kong Financial Hardship Survey which reveals improving sentiment and diminishing concern for the financial impact of COVID-19 on household incomes, despite increasingly difficult employment conditions that grip the territory.
The third wave of the Hong Kong survey polled 1,031 adults in the week of 4 May at a time when the spread of the virus slowed down, and government departments discussed the future relaxation of control measures. TransUnion has been polling consumers around the world on the financial impact of COVID-19 since March 11, the week the World Health Organization (WHO) declared a global pandemic.
Negative Impact on Consumer Income Shrinks
The latest survey results show the extent of the impact of the pandemic on consumer income is shifting and consumers are becoming less fearful. Compared to the previous two waves of the survey conducted in Hong Kong in April, the percentage of respondents who replied their household incomes were impacted by COVID-19 decreased by 4%, from 72% to 68%. Meanwhile, the percentage of respondents who had not yet seen their incomes fall but expected their household incomes to be impacted in the future also decreased from 10% to 7%. While these shifts are still too early to call a definitive positive trend, they may be an indication that Hong Kong has passed the peak in the number of consumers whose incomes have been impacted by COVID-19.
Financial Concerns Reduce Despite Challenging Employment Conditions
The survey results show consumers continue to be impacted by the difficult conditions in the employment market in Hong Kong. In this latest round of the survey, 23% of those respondents whose incomes had been impacted reported they had lost their jobs, up 6% from 17% in April. More than half of impacted respondents (58%) said their work hours had been reduced.
Despite this, fewer Hong Kong consumers report that they are concerned about their ability to pay their household bills. The percentage of impacted respondents with concerns over bill payment fell from 69% in April to 63% in the latest survey. The top five expense/payment categories where respondents said they expected to have difficulties paying were credit card bills, rent payment, insurance, personal loans and mortgages. 40% of impacted respondents felt that they would be unable to pay their bills in between one- and three-months’ time, down from 46% in the previous wave of the survey.
“There certainly seems to be a ‘recovery factor’ influencing the results of the survey for the first time as the spread of the virus has slowed and talk of relaxation of restrictions increases,” said Francis Lau, director of research and consulting, Asia Pacific, TransUnion. “Whether consumers in Hong Kong are being temporarily optimistic requires further study. With unemployment increasing in the survey data, this certainly points to continued challenges ahead in managing household finances.”
More Prefer to Use Savings Than Seek Guidance from Creditors. An Opportunity for Credit Education
Interestingly, despite the household financial deficits being experienced, less than half (43%) of impacted Hong Kong consumers had approached their creditors to discuss payment options. When faced with a shortage of funds, impacted respondents often utilize their own savings (54%), borrow money from friends and relatives (44%), or simply pay only a partial amount of their bills (26%).
“Responsible borrowing in the form of small ticket loans is an alternative option that can help overcome short-term financial difficulties,” said Marie Claire Lim Moore, CEO, Hong Kong, TransUnion. “The willingness of Hong Kong consumers to consider other credit options falls behind that shown in other international markets by our survey data. Only half of people we surveyed here knew their credit scores, which shows there are opportunities for both consumers to improve their financial health through self-credit monitoring and for lenders to support consumers in times of crisis. Hong Kong consumers who monitor their credit have a better opportunity to shape their financial future, even in times of uncertainty.”
TransUnion’s research and credit education tools will be updated regularly on its COVID-19 website as the company continues to support consumers and businesses from around the globe. Businesses interested in learning how to navigate the impacts of COVID-19 can gain insights from TransUnion webinars, here.