Analysis-Europe's Luxury stocks at risk of going out of style

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Analysis-Europe's Luxury stocks at risk of going out of style

© Reuters. FILE PHOTO: A model presents a creation by designer Nicolas Ghesquiere as part of his Spring/Summer 2024 Women's ready-to-wear collection show for fashion house Louis Vuitton during Paris Fashion Week in Paris, France, October 2, 2023. REUTERS/Stephanie L

Some $175 billion has been knocked off the value of those 10 stocks since the end of March as China's recovery has been rocky and growth is slowing, while high inflation and rising interest rates are forcing U.S. shoppers to tighten their purse strings. Ahkong pointed to rising concern over the outlook for luxury consumption across the U.S., Europe and China, a view echoed by Peter Garnry, head of equity strategy at Saxo Bank.

Some analysts have turned cautious on the luxury sector, with UBS last week reducing its estimates to account for the risk of slowing Chinese consumption. Gerry Fowler, head of European equity strategy and global derivative strategy at UBS, said risks in luxury stocks started to become more apparent in May.Though consensus has turned more cautious, several market players and analysts remain optimistic for the long-term.

"Up to now, luxury names were seen as a place to hide, it was really consensual. That was also the reason why we were not so keen to be overweight at the beginning of the year," he said.

 

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Analysis: Europe's Luxury stocks at risk of going out of styleEurope's luxury brands may have sparkled at Paris Fashion Week, but investors are questioning their taste for the shares in the face of a Chinese slowdown and interest rate uncertainty.
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