{"id":6980,"date":"2010-12-20T23:12:44","date_gmt":"2010-12-20T23:12:44","guid":{"rendered":""},"modified":"2010-12-20T23:12:44","modified_gmt":"2010-12-20T23:12:44","slug":"Luxury-goods-stocks-are-flying-high","status":"publish","type":"post","link":"https:\/\/asiancemagazine.com\/?p=6980","title":{"rendered":"Luxury-goods stocks are flying high"},"content":{"rendered":"

Companies that cater to rich tastes slashed costs during the recession and are now seeing their bottom lines swell as sales surge. Are the stocks bargains now?<\/p>\n

While many on Main Street are struggling, companies that sell to the biggest spenders — among them Tiffany (TIF, news, msgs), Cartier, LVMH Mo\u00ebt Hennessey Louis Vuitton (LVMUY, news, msgs) and R\u00e9my Cointreau (REMYF, news, msgs) — are having themselves a merry little Christmas.<\/p>\n

<\/strong>Luxury-goods sales are surging here and abroad. Profits are widening. And stocks are flying high.<\/p>\n

Last summer (with impeccably bad timing), fund manager Guggenheim\/Claymore wound up the Claymore\/Robb Report Global Luxury Index exchange-traded fund, which tracked a broad basket of the world’s top luxury stocks.<\/p>\n

“The luxury sector was the sector to be in in 2010,” says Caroline Reyl, who manages a \u20ac1 billion-plus, luxury-focused premium-brands fund for Pictet, an asset management company in Zurich. “Our fund is up 44% this year. We’re slightly above our peak from 2007.”<\/p>\n

What are the reasons? Some of this is a stock market effect, she says. Luxury stocks have been playing catch-up since plummeting during the crash.<\/p>\n

But the really interesting story relates to the fundamentals. Luxury goods companies are selling to the two groups of people who have any money left: The rich, who are getting richer and richer, and consumers in emerging markets, who are getting richer.<\/p>\n

<\/strong>“About 40% of the sales of premium brand companies are related to the emerging-market consumer,” says Reyl. Cargo ships are carrying a lot of Swiss watches, cases of champagne and fancy Italian shoes to the newly wealthy in China, Brazil and India. And emerging-market tourists are carrying a lot of luxury goods home themselves when they travel.<\/p>\n

<\/strong>Greater China — including Hong Kong and Taiwan — accounts for 15% of global luxury demand, says Reyl. She believes that by the end of 2011 China will have overtaken Japan, once the powerhouse of luxury sales.<\/p>\n

SOURCE<\/a>
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