Coronavirus puts luxury brand shares under pressure

Coronavirus puts luxury brand shares under pressure

The threat of a possible corona epidemic in China has caused a shockwave in European luxury goods stocks. With the Chinese New Year approaching, the coronavirus could heavily impact these brands’ turnover.

 

15 billion dollars

Last Tuesday, the exchange rates of almost all luxury shares, such as LVMHRichemontKering, and Burberry, were down by between 1.9% and 3%. During the first trading hours, losses rose up to around 4%, causing the sector as a whole to see around 15 billion dollars (13.5 billion euros) of market capitalization evaporate.

 

Chinese shoppers account for 35% of global luxury goods sales and 90% of last year’s growth in the market, Reuters states, based on figures from Bain & Company. This shows the impact that a Chinese (health) crisis can have on the turnover of European luxury brands. According to the latest reports, the coronavirus has already killed at least seventeen people and infected 633. To prevent new infections, Chinese authorities have closed three cities in the meantime, writes newspaper De Standaard.

 

The timing of the virus outbreak could hardly be worse. This weekend, the Chinese are celebrating the New Year. It is the start of a week-long festive holiday period which traditionally also leads to a peak in the retail sector.