(News Bulletin 247) – Luxury stocks are progressing significantly on the stock market this Friday, driven by a rebound in retail sales in China in August. But this encouraging signal must be further reinforced in the coming months.

After many gloomy sessions, luxury is regaining color on the stock market this Friday. LVMH rose 3.4%, Kering rose 2.7%, which constituted the two biggest increases in the CAC 40, and Hermès rose 1.9%. And given the weight of luxury within the Parisian index, the latter is progressing significantly (+1.5%).

This swallow does not necessarily bring spring for the sector, which remains in a bad phase. The pan-European index of luxury values ​​remains down 9% since July 14.

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Satisfactory retail sales

“For a month, the pressure on luxury stocks on the stock market has come from China and the disappointment in the economic situation in the country. Because activity is slowing down in the United States and European consumers find themselves under continued pressure from inflation. So if China continues to disappoint it becomes complicated for the sector,” recalls Jie Zhang, analyst at the independent research firm AlphaValue.

To return to this morning’s increase, it is linked to statistics in China. “These are a set of figures in China that are promising for luxury this Friday on the stock market, particularly retail sales,” explains Jie Zhang.

“These retail sales showed a positive inflection in August. Since June this indicator had declined, going from an increase of 12.7% in May to 3.1% in June then 2.5% in July. they rose again by 4.6%. However, retail sales are very linked to consumer confidence,” explains the analyst.

Figures to be confirmed

Another analyst confirms the importance of this retail sales figure “which helps a sector which has suffered from the disappointing recovery in China”. This intermediary also mentions industrial production, which increased by 4.5% over one year, marking an acceleration compared to 3.7% in July.

This better form will of course have to be consolidated by the next data. “Obviously one month is not enough to establish a real trend, even if these data are encouraging,” underlines Jie Zhang.

“We can, however, remember that the basis of comparison for the next data in China will be easier from the end of September. Quite simply because last year, the country had put in place new confinements from the end of September , with activity which had reached a low in November,” explains the analyst.

On Thursday, Barclays showed caution on luxury. “We are becoming more cautious on luxury, as we see the risk of disappointing sales revenue growth from China, as well as margin risk across this universe,” warned the bank.

The establishment had lowered its recommendation on LVMH from “overweight” to “online weighting”. Barclays does not have any major grievances against the number one luxury company, deeming it more robust in the event of a deterioration in the economy than the other groups. But she fears that expectations will be too high for this good student and prefers stocks with more attractive valuations (Prada, Richemont) or with even better dynamics (Moncler).