LIVE MARKETS-Luxury: bear market rally ahead?

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LUXURY: BEAR-MARKET RALLY AHEAD?

A gauge of Europe's top 10 luxury stocks .STXLUXP has fallen more than 37% from its lifetime peak in February 2025, but after such a battering in a once high-flying market darling, valuations have compressed, leaving room for a rebound.

Berenberg, which has long held a bearish view on the sector, is not changing its longer-term stance but sees conditions falling into place for a rebound.

Following discussions with a senior executive at a Chinese luxury department store, the bank said China's luxury market endured a weak Golden Week and a disappointing start to the fourth quarter, reinforcing concerns over sluggish demand.

Berenberg said the downturn is being driven by cyclical and structural pressures, from a weaker stock market to rising Chinese competition and a booming second-hand market.

As a result, any recovery in Chinese luxury spending remains years away. Yet analysts including Nick Anderson see "the growing chance, near-term, of a bear-market rally after Q3's steep sell-off."

(Danilo Masoni)

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