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Shenzhen's permanent residents are now limited to one visit a week to Hong Kong in an attempt to deter parallel-goods traders, but Chief Executive Leung Chun-ying does not expect the situation to ease overnight.
New People's Party lawmaker Michael Tien Puk-sun also said it would take six to nine months to feel the effect of the policy change, as current holders of multiple-entry permits would still be able to travel freely while their one-year visas remained valid.
Starting from yesterday, Shenzhen residents could apply for only one-visit-per-week permits instead of the visas that were launched in 2009 to allow unlimited trips. This will slash the number of Shenzhen visitors by about 30 per cent, or 4.5 million.
Beijing's Hong Kong and Macau Affairs Office told Xinhua that the measure was adopted "at the request of the Hong Kong government". The office said: "It shows the central government's concern about Hong Kong people's lives."
Shenzhen residents who must visit Hong Kong frequently for family, business or other "special" reasons still qualified for multi-entry permits, Xinhua said.
New Territories residents have long complained of mainlanders "abusing" the old scheme to engage in parallel trading.
Leung also vowed to get tough on Hongkongers who engaged in such trading.
He said the change in policy had been planned since June, but had taken time to be realised because of counterproductive protests against the traders.
Tourism Board chairman Peter Lam Kin-ngok warned retailers and caterers might feel the impact in the next few months. He reiterated that the tourism sector hoped Beijing would add more mainland cities to an individual visit scheme that let residents of 49 cities cross the border independent of a tour group.
Lawmaker Jeffrey Lam Kin-fung, representing the commercial sector, said he understood that among the local retailers that had been serving mainly parallel-goods traders, "up to 30 per cent of [their] shops could shut down … affecting [up to] 3,000 jobs".
But a Bank of America Merrill Lynch report said while it was slashing its retail sales forecast for the city to minus 5.8 per cent year on year, "the actual hit may be less, since these visitors can raise their spending per visit".
Hong Kong-listed retail stocks slid even as the market continued its rally, with the Hang Seng Index closing up 2.73 per cent.
Cosmetics chain Bonjour fell 7.14 per cent to close at 65 HK cents and Sa Sa International was down 6.24 per cent to HK$4.06.
Christopher Cheung Wah-fung, lawmaker for the financial services sector who is also a broker, said: "Retail stocks are likely to … be haunted by the new policy in the near term."