(04-08-2012, 07:11 AM)BlackCat Wrote: [ -> ]Interesting, though overly dramatic, piece by John Hempton of Bronte Capital. They are looking to short Richemont as a 'trading call', based on the discrepancy between Swiss watch exports to HK, and the HK sales tax receipts ( "Jewellery, watches, clocks and valuable gifts" by value).
http://brontecapital.blogspot.sg/2012/08...ullet.html
This is an interesting article by John.
No doubt the luxury goods market in China and Hong Kong is slowing down and there could be a built up in inventory as a result of that. But by assuming that all watches imported into Hong Kong, if not sold through the RETAIL network in HK, would end up as inventory is a FLAW.
Hong Kong imports and
re-exports as well. It seems to me that the "re-export figures" are missing in John's equation, which led him into believing that there exists this "discrepancy" that he could exploit.
Extracts from the attached article:
Swiss Watch Export:
Geographical distribution (in CHF million)
Countries Value 2011 Change in % Share in %
Hong Kong 4,085.9 +28.3% 21.2%
USA 1,984.6 +18.4% 10.3%
China 1,636.3 +48.7% 8.5%
France 1,296.4 +10.9% 6.7%
Singapore 1,146.4 +27.5% 5.9%
O. Countries 9,128.7 +12.2% 47.4%
Total 19,278.2 +19.2% 100.0%
All of the Swiss watch industry’s main markets fared better than in 2010. Absorbing more than 20% of Swiss watch exports by value, Hong Kong recorded a very pronounced upswing (+28.3%), il¬lustrating indirectly the dynamism of markets sup-plied by its
re-exports.
World watch imports
Once again the main importer of watch industry products was Hong Kong, which
re-exported a large share. Its imports totalled 9.7 billion dol¬lars in 2011 (+30.7%).