Shares of the global luxury group, which relies heavily on Chinese shoppers, rose on Tuesday after Beijing further eased some of the Covid restrictions that have been in place for the past three years, with a full-scale reopening soon. Expectations have risen for
Starting Jan. 8, China will stop requiring quarantine for incoming travelers, the National Health Commission said on Monday, citing a move to ease restrictions on borders that have been largely closed since 2020. took a big step.
News of the easing sent stock markets around the world higher, with luxury stocks particularly benefiting. Shares of his LVMH, the world’s largest luxury group and Europe’s number one company by market capitalization, rose 2.7%, while Cartier owner Richemont rose almost 4%.
China is slowly moving away from a draconian zero-coronavirus policy that has hurt its economy, kept consumers indoors and sparked a wave of public discontent, as the world’s €350 billion ($372 billion) luxury 21% of the commodities market, followed by North America and Europe.
Before the current economic slowdown, it was the fastest-growing region for years, with young, urban middle-class professionals buying €10,000 plus ($10,633) Birkin handbags from Hermès and Gucci. ‘s €1,000 fur-lined loafers were moving the luxury market. .
Expected to be the industry’s top market by 2025, French Kering’s star brand Gucci accounts for around 35% of annual sales, rivals LVMH’s fashion and leather goods division 27% and Hermès 26%. occupies
With Europe facing an energy crisis and the US economy cooling on rising interest rates, China is looking to rebound next year, and the luxury industry wants to capitalize on that.
But some analysts say investors shouldn’t get carried away.
Susannah Streeter, senior investment and market analyst at Hargreaves Lansdowne, said: “With infection rates still rising (in China), it is unlikely that international trade will return to pre-pandemic levels as quickly. No.
“The recovery may still be slow, especially given consumer attention, and regionally popular holiday shopping destinations may build up first,” she said. is gearing up for the return of wealthy, globe-trotting Chinese tourists.”
According to a recent report by McKinsey consultancy, non-luxury fashion sales are expected to grow by 2% to 7% in 2023, while luxury goods sales should rise by 9% to 14% over the same period. .
“China is likely to remain a core market for fashion consumption in the long term, and there are huge untapped opportunities, especially among a consumer segment with strong feelings towards luxury brands,” he said.
By Silvia Aloisi. Editor: Louise Heavens Editor: Robert Birsel
What Will China’s Covid Deregulation Mean for Fashion?
China has rolled back some draconian coronavirus measures, paving the way for a recovery in luxury goods and retail. But experts warn that the road is likely to be long and arduous.