Luxury Stocks Take a Nose Dive

Louis Vuitton china

Image courtesy Bloomberg

Luxury stocks across the board took one of their largest single-day hits since October 2018 and largely for the same reasons: China. It’s no secret that the world’s most reputable brands see China as absolutely fundamental to their future prospects for growth, and while the dramatic transformation in Chinese consumption habits over the past few decades has indeed accounted for much of the industry’s strength in recent years, being so dependent on Asian markets can be a double-edged sword. While it would be great if they could lean on their Asian markets while Europe sorts itself out of it’s Brexit mess (read: Brexit and Bags ), unfortunately they don’t have that luxury.

According to reporting by Reuters, Shares for the sector’s biggest names – LVMH, Hermes, Ferragamo, Moncler and Kering – were all down between 1-2% on Monday. Prada took an even deeper nose-dive, closing the day down 5% in Hong Kong. Why the fall? China’s exports, or the amount of goods and services it provides the rest of the world, fell by the most in over two years according to newly released data. Imports fell as well, though not as significantly. This trade data also revealed China’s surplus with the United States, a major sticking point in trade negotiations between the US and China, hit an all-time high in 2018. This could possibly escalate the already tense trade situation between two global economic giants.

If you’re wondering when the luxury industry might get some respite, don’t hold your breath. The most significant luxury stocks like LVMH begin reporting quarterly earnings towards the end of the month. With all of the turmoil in markets over the past quarter, we wouldn’t be surprised if we see a lot of missed targets but we’ll continue to keep you updated…

Photo source: Getty Images

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