HSBC analysts say European luxury stocks are unlikely to improve in the near
term as H2 looks more challenging. LVMH and Burberry extended recent declines
after brokers cut both to hold, with LVMH viewed as a soft-luxury bellwether
facing a weak outlook and Burberry seen as having limited upside after recent
repositioning. The sector is under pressure from weak Asian demand and reduced
tourist spending tied to the Middle East conflict. Goldman Sachs’ luxury basket
is down 13% YTD and LVMH’s P/E has dropped to a 10-year low. HSBC flags
near-term downside risks that could affect the sector: slowing mainland China
growth momentum; negative social-media backlash from an LVMH–Molly Tea trademark
dispute; and easing sales growth in Korea and North America.
