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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China’s Lambda personalities opt for nontraditional investments

Isaac Mostovicz writes that China's growing presence in the global luxury industry could have implications in the Western world...


Being wealthy is one thing, and being art-buying wealthy is another. Luxury Insider reports that ultra-rich Chinese are beginning to throw their considerable status and wealth around in nontraditional (for Chinese) markets such as art and wine.

The article features a very interesting quote by Kevin Ching, CEO of Sotheby’s in Hong Kong:

“We saw a big surge in Chinese buying in categories that they were not familiar with. We have now seen mainland buying – not in huge quantities – of Western, Impressionist and contemporary art.”

This tells us that wealthy Chinese people are buying items because of their real and perceived worth. They are seeking to become a part of the small circle of western art buyers who spend large sums on buying art. Essentially they are taking cues from the Lambda personalities who they count as their friends or colleagues.

The article also has some key figures that further illustrate China’s growth into a global luxe powerhouse, a crown that once belonged to Japan.

For the first time in Sotheby’s 10-year history in Hong Kong, mainland buyers accounted for nearly 40 percent of Sotheby’s Asian sales during last autumn’s auctions. That figure represents a two-fold jump from 18 percent in the fall of 2008.

Does this newfound interest in expensive art signal a dimming interest in diamonds in Asia? It’s hard to say at this point.

What’s certain is that China’s rapidly growing economy is major impact on the local luxe industry, and that impact is reverberating on the other side of the globe, causing a mad dash by Western’s luxe labels to get a foothold in this booming new luxe market.

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