Berenberg sees no end to luxury bear market as China woes persist
XLY•Berenberg sees no end to the luxury bear market without a clear reversal in Chinese, aspirational or Gen Z headwinds, and says weak Q3 conditions are persisting into Q4.
1. Bear-market risks persist
Berenberg says Chinese demand is a structural, not cyclical, problem and cites a poor Chinese Golden Week, disruption from US midterms and Q4 equity selloffs as factors weighing on the sector. It also flags risks to European tourism from global coverage of riots in France and elsewhere, and says luxury is a geared AI play rather than a defensive trade.
2. Investment appeal
The bank sees opportunities in absolute and affordable luxury but avoids the aspirational middle. It says restoring the sector’s investment appeal will require higher shareholder returns and lower capital spending.
