Expectedly, China has been fueling growth for European luxury brands as the sector hopes for a quick rebound post covid 19 pandemic. This can be traced to the rise in the stocks of European luxury brands like LVMH, Hermès, and Kering during the global pandemic. The records high in stocks by these brands have called for comparisons with US technology behemoths a report by Bloomberg shows.
“We view European luxury companies as the European stock market equivalent of US tech: businesses that are unrivaled in their global dominance,” Giles Rothbarth, the manager of the Blackrock European Dynamic Fund, told Bloomberg.
The fast economic rebound in China after the major outbreak of the pandemic in 2020 has positively impacted consumption patterns, in a country regarded as the capital of world luxury. This development is helping retail-focused companies overcome the ripple effect of the shutdown and slumps in market share using the outbreak.
However, investors shouldn’t ignore global patterns. Luxury markets in most countries have been heavily impacted by COVID-19, and the crisis has caused “an unprecedented fall” in market size — down 23 percent from 2019, Bain & Company reported.
Stocks might trade higher, but market watchers express caution because once things return to normal, the Chinese appetite for luxury will ultimately slow down. There is likely to be a rise in the demand for traveling, dining, and outdoor leisure activities will become the new priority.
Jing Daily predicts the current international travel restrictions are keeping Chinese consumers in their home country. Thus, buying local luxury goods has become a relaxing pastime. However, travel will again be encouraged once vaccinations increase and the world reaches herd immunity.
Consequently, spending habits will react to the new lifestyle, and post-pandemic travel will take precedence over shopping. Plus, emerging trends in areas like wellbeing and health will surely emerge.