Bermuda Post

Thursday, Mar 28, 2024

China-addicted luxury stocks cheer Beijing’s looser COVID curbs

China-addicted luxury stocks cheer Beijing’s looser COVID curbs

Shares in global luxury goods groups, which rely heavily on Chinese shoppers, rose on Tuesday after Beijing further relaxed some COVID restrictions that had been in place for the past three years, fueling hopes of a full-blown reopening soon.
China will stop requiring inbound travelers to go into quarantine starting from Jan. 8, the National Health Commission said on Monday in a major step towards easing curbs on its borders, which have been largely shut since 2020.

News of the loosening lifted stock markets worldwide, with luxury shares in particular benefiting. Shares in LVMH , the world’s biggest luxury group and Europe’s number 1 company by market capitalization, were up 2.7 percent while Cartier-owner Richemont rose almost 4 percent.

China, which is gradually moving away from a strict zero-COVID-19 policy that battered its economy, kept consumers indoors and sparked a wave of public discontent, accounts for 21 percent of the world’s 350-billion euro luxury goods market, behind North America and Europe.

Before the current slowdown, it had for years been the fastest growing region, with young, urban, middle class professionals powering the luxury market by splashing out on Hermes’ 10,000 euro-plus ($10,633) Birkin handbags and Gucci’s 1,000 euro fur-lined loafers.

It is expected to become the top market for the industry by 2025 and already generates about 35 percent of annual sales at Gucci, French group Kering’s star brand, 27 percent for rival LVMH’s fashion and leather goods division and 26 percent for Hermes.

With Europe facing an energy crisis and the US economy also cooling due to higher interest rates, China is looking to a recovery next year and the luxury world is hoping to take advantage of that.

However, some analysts said investors should not get carried away.

“With infection rates still increasing (in China) it won’t necessarily mean international trade will snap back to pre-pandemic levels super quickly,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“Recovery may still be slow, particularly given the caution among consumers, and is likely to build in popular holiday shopping destinations regionally first,” she said. “Brands will be gearing up for the return of wealthy, globetrotting Chinese tourists.”

According to a recent report by the McKinsey consultancy, while non-luxury fashion sales are expected to rise between 2 percent and 7 percent in 2023, luxury sales should climb 9 percent to 14 percent over the same period.

“China will likely remain a core market for fashion consumption in the long term, with significant untapped opportunities among a customer base whose sentiment for luxury brands in particular is holding strong,” it said.
Newsletter

Related Articles

Bermuda Post
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
'I just lost it' Lowe’s worker fired after 13 years of employment for confronting thieves trying to steal $2K of merchandise
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
×