Shares in some big European luxury goods companies fell sharply on Thursday, with traders citing growing concerns over slowing demand in the key growth Chinese market following latest signs of a weakning in the world’s No.2 economy.
By 1225 GMT, a gauge of top ten European luxury stocks fell more than 3 per cent, approaching the low hit during a early August market rout. Sector heavyweight LVMH was also down over 3 per cent in Paris.
Shares in Hermes and Italy’s Brunello Cucinelli fell 6 and 5 per cent respectively, among the top fallers on Europe’s region-wide STOXX 600 index, which was down just 0.4 per cent.
JPMorgan has this week ditched its buy rating on Chinese stocks, warning of the risk of a second tariff war after November’s US election and citing worries about the country’s growth.
Growth in China’s services sector activity slowed in August despite the summer travel peak, prompting some firms to cut staff amid concerns about rising costs, a private-sector survey showed on Wednesday.
Analysts also highlighted a media report that said LVMH-owned Tiffany was downsizing its flagship store in Shanghai as a reason for Thursday’s weakness in luxury stocks.
“Concerns about demand in China have disproportionally hit the luxury sector,” said Jelena Sokolova, senior equity analyst at Morningstar.
“LVMH’s Tiffany is scaling down their flagship in Shanghai, and being conscious of a potential domino-effect, this is a space to watch.”
