China’s luxury market could be nearing the end of its slowdown, as improving stock prices and pent-up demand begin to lift consumer sentiment, according to analysts.
“This may be wealth-effect related as the China stock market has risen alongside some pent-up buying,” said Lorraine Tan, director of equity research, and Kai Wang, Asia equity strategist. “The question is whether it can be sustained.”
LVMH, the world’s largest luxury group, echoed that cautious optimism after reporting its first quarterly growth this year and noting that Chinese consumption was “getting close to stabilisation”.
The French luxury brand reported a 1 per cent growth in sales to €18.3 billion (US$21.2 billion) for the third quarter, beating expectations.
Chief financial officer Cecile Cabanis said sales in mainland China grew by mid to high-single digits during the quarter, while spending by Chinese tourists abroad fell by double digits.
Cabanis added that a full recovery was still in train given the country’s prolonged property slump and high youth unemployment. “It’s still going to take time until we have a rebound on China,” she added.
