Top tips for luxury stocks

Isaac Mostovicz writes that the significant growth of luxury stocks in emerging markets is attracting increased attention from investors...

Head of equities at Swiss & Global Asset Management, Scilla Huang Sun talks to The Wall Street Journal about why luxury stocks are now worth a look.

As I have discussed in recent posts, luxury stocks are booming in emerging markets. As an investor, this surge in wealth could be fruitful.

James Hall from the Daily Telegraph recently reported that urbanisation on an unprecedented scale is taking hold in China, the nation set to overtake Japan as the world’s largest luxury market by 2015. It is this “new consumerism” which is driving luxury growth in many emerging markets.

As Huang Sun highlights, while the long-term outlook for luxury stocks remains strong, they are susceptible to geopolitical events. Luxury spending has been hit hard following the recent Japanese earthquake and tsunami. Huang Sun estimates that the Japan and Middle East events will reduce sales growth by 2% in 2011.

For Huang Sun, prosperous luxury brands are those with successful brand management, strong financials and which are broadly diversified across regions and sectors.

Read the full interview here.

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