A painful relity check


Last week was quite challenging, if not downright disastrous, for luxury stocks. In our chart it can be seen how  only 3 out of 20 stocks managed to close in the green for the week. Obviously the new round of the trade war involving the US and China, where tariffs have been hiked from 10% to 25% on 200 billions of Chinese goods, was the dominant theme. The recent developments provide a textbook case of luxury stocks behavior during risk-off phases: when things go south they do loose way more than their respective benchmarks. Actually in a plethora of cases the recent losses started to look like  a correction.

Investors should learn a fundamental lesson from what has happened: as a matter of fact substantial risks DO exist in this segment of the market, particularly after an intense bull market that pushed in quite a few cases valuations to a fairly high level. On top of that if China, by far the largest luxury market in the world,  happens to be the primary source of concern for the global economy the effect is bound to be magnified. It comes as no surprise that the high-end car segment suffered a particularly nasty trimming as there’s a substantial risk this sector might end up right in the middle of the trade storm.

On the other hand some remarkable exceptions were noticeable: Ferrari stock saw a very nice spike, riding high on the back of excellent quarterly results. Moncler crawled back up strongly last Friday (+3,3%) , again after releasing strong Q1 numbers.

So what lies ahead ? Investors should always keep this in mind: it is very unlikely, if not downright impossible, the high beta of luxury stocks during bull runs would translate into more defensive features when the environment is more challenging. Essentially luxury is a bet on the ongoing process of global growth. A process that lifted hundreds of millions out of poverty in the last few decades, opening up enormous new markets for companies offering high-end products. If this process  come to a halt or even significantly slow down, luxury companies will suffer enormously.

CompanyPerformance YTDstock market 
Tiffany30.23%New Yorkdown
LVMH 29.18%Parisdown
Christian Dior27.40%Parisdown
Moncler 26.75%Milanodown
Estee Lauder 26.33%New Yorkdown
Hermes 25.54%Parisdown
Ralph Lauren20.11%New Yorkdown
Porsche 15.38%Frankfurtdown
Richemont 12.98%Zurichdown
Capri/Michael Kors12.84%New Yorkdown
Tod's3.30%Milano down
Brunello Cucinelli2.77%Milanodown
Tapestry/Coach-4.44%New Yorkup
Prada-7.56%Hong Kongup
Tesla -28.03%New Yorkdown

Our editorial staff includes people with different professional backgrounds who share a passion for writing and who want to create and develop a dialogue with their readers and with the world.

Related Posts


Milan is gearing up to host the 12th edition of Esxence – The Art Perfumery Event, the world’s most important exhibition in the field of Artistic Perfumery and an exclusive showcase of the finest craft production, set to be staged from 16 to 19 April 2020and this time to be hosted for the first time in the top-end design venue of MiCo, Milano Convention Centre, the throbbing heart of the CityLife District

MADMOOD, MFW: Luna Berlusconi honors the curvy woman with a divine work of art

The Milan fashion scene celebrates Assomoda’s half century in the business and relaunches the curvy woman: these will be the core themes of the event taking place onWednesday, September 18 and Thursday, September 19 at theGiureconsulti Palaceon theMercanti square, where the Milan Fashion Week runwayswill introduce the SS 2020 women’s collections

Taycan, the electric car by Porsche

Porsche has unveiled its first fully electric car: the Taycan. The new automobile will be available in two models, the Turbo and top-range Turbo S, with 761 HP and 680 HP respectively. The Taycan retains Porsche signature aesthetics: clean sleek lines, a coupe-style sloping roofing and full-length lighting that recalls the 911 Carrera.