(News Bulletin 247) – Chinese authorities will organize a press conference on Tuesday held by the National Development and Reform Commission. Pending announcements, luxury values ​​are progressing in Paris.

Is China heading for a new package of stimulus measures to support its flagging growth? The National Development and Reform Commission, a Chinese planning body, will hold a press conference at 10 a.m. on Tuesday. This suggests new announcements after those made two weeks ago by the Chinese authorities.

Rate reductions from the People’s Bank of China as well as measures to support a real estate market that has been depressed for three years now have been implemented.

According to AFP, Tuesday’s press conference should go even further, potentially with fiscal support measures and/or measures likely to help household consumption. China is targeting growth of at least 5% this year.

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Luxury is already integrating the new a little

Chinese stock markets have been closed since September 30 and until this Monday inclusive due to celebrations linked to the National Day. At the close of last Monday, the CSI 300, which brings together the largest stocks in Shanghai and Shenzhen, had gained 25% in five days, thanks to the measures announced.

On the Paris Stock Exchange this Monday, luxury values ​​are rising in anticipation of potential announcements on Tuesday. Kering rose 4% around 3:30 p.m., the largest increase in the CAC 40, LVMH took 2% and Hermès gained 1.3%.

“It is probably the information on this press conference which explains this positive reaction on luxury, because it suggests that China could take new recovery measures,” judges an analyst.

China is a key region for luxury groups, and Chinese household spending remains very important for their growth. Bank of America estimates that these expenses, in their entirety, represent around 30% of luxury groups’ revenues. In addition, over the last 20 years, luxury has shown annual global growth of 9% per year and the American bank estimates that Chinese consumers contributed 40% to this growth.

Caution of design offices

While revenues in China itself may have suffered recently, Chinese consumers largely explain the strong growth recorded in Japan by companies in the sector.

In the second quarter, LVMH saw its revenues jump 57% in this country, thanks to purchases by Chinese tourists, attracted by the weakness of the yen. The financial director of LVMH, Jean-Jacques Guiony, reminded analysts in July that Fukuoka, a large city in Japan, was located just two hours by boat from the Chinese coast.

“The slowdown in consumption is only just materializing in the third quarter of 2024. We believe that an improvement in confidence and sentiment is necessary to even meet our forecast of stable Chinese luxury growth year-on-year for 2025″, Bank of America warned in a note published last week.

HSBC for its part judged, also last week, that the mood of Chinese luxury consumers was “rather mediocre”, judging that the “road to the recovery of Chinese consumption of luxury products (would be) long”.

Deutsche Bank was not optimistic either. “The radical change in demand (for luxury, editor’s note) in China in August and September has reinforced fears that the period of normalization of demand will last longer than expected. In our opinion, investor expectations have been revised for the third and fourth trimester” she judged.

“The question now arises for 2025, where there is a lack of visibility on the structural or cyclical nature of the slowdown in Chinese consumption and the extent to which Chinese stimulus measures could reinvigorate demand. We believe that it “There is a significant risk that a drastic change in demand will result in lower growth prospects for the industry in 2025,” the bank concluded.