The past 5 days were, for want of a better expression, quite bad for luxury stocks. The new chapter of the US vs China saga led to a disastrous inception of the week last Monday, followed by a partial recovery.
The Dow Jones Industrials managed to close in the red for a fifth consecutive week, something that didn’t occur since 2011. In Europe figures would have turned out even worse if it wasn’t for a good session on Friday May 24th. Overall losses were not excessively high, investors though shunned mostly growth and cyclical assets, perceived as particularly risky in the current environment.
Hence it is not particularly surprising the luxury space recorded another 5-days round of decline, it is nonetheless impressive how losses cut through most stock prices across our board. As readers can see only 2 out of 20 names advanced. Since the beginning of the year only 11 luxury stocks are offering a double digit price return while only 10 are over-performing their own national benchmark.
Obviously within our set there are plenty of idiosyncratic themes injecting volatility into many groups stock performances. It is undeniable though how investors are currently rotating out of this whole niche. For instance Richemont performance is quite telling: this stock is now climbing fast the ladder of the sector, catching up with most peers, by simply standing its own ground without major losses.
As a matter of fact the future now appears particularly hazy, it is quite likely that an agreement, even a less than desirable one, among the 2 contenders would probably spark an intense recovery, while the recent troubles would amount to nothing more than an opportunity to go on a bargain-hunting binge. On the other hand with the conflict intensifying there’s a serious risk we would be facing the developing of a new bear market in the luxury sector.
|Company||Performance YTD||Stock Market|
|Estee Lauder||28.84%||New York||up|
|Ralph Lauren||8.75%||New York||down|
|Capri/Michael Kors||5.43%||New York||down|