LVMH Market Cap Drops $50 Billion in Weeks
Arnaud LVMH Chairman Likely to Visit China After All
During the COVID-19 pandemic, the stock prices of luxury brand companies soared, but they have recently been faltering. This is because the Chinese economy is showing signs of slowdown, and the Chinese, who have long been considered the 'big spenders' in the luxury market, have started to reduce their luxury shopping.
On the 4th (local time), Bloomberg reported that the stock prices of luxury companies, including the French luxury group Louis Vuitton Mo?t Hennessy (LVMH), are retreating. LVMH owns dozens of luxury brands, including Louis Vuitton and Christian Dior.
According to the report, LVMH, which became the first European company to surpass a market capitalization of $500 billion (about 653 trillion KRW) last April, has dropped more than $50 billion (about 65 trillion KRW) in just a few weeks.
Bernard Arnault, chairman of the world-renowned luxury brand Louis Vuitton Mo?t Hennessy (LVMH), is reporting the annual performance for 2022 in Paris, France, on January 26th (local time). [Image source=Yonhap News]
As a result, Bernard Arnault, chairman of LVMH and once the richest person in the world, lost the top spot again to Elon Musk, CEO of Tesla.
Meanwhile, the 'Stoxx European Luxury Index,' composed of European luxury companies, also fell nearly 5% last month. Until then, amid expectations of China's reopening (resumption of economic activities), the valuation of luxury stocks had been rising record-high, continuing an upward trend of nearly 50% since early October last year.
China ended COVID-19 restrictions and resumed economic activities at the end of last year, but domestic demand remains sluggish, and the economy is struggling to recover. On top of this, the worst youth unemployment rate in history has compounded the situation, making consumption conditions increasingly unstable.
According to the National Bureau of Statistics, the youth unemployment rate in April reached 20.4%, the highest since related statistics began in 2018. Consequently, there are evaluations that the youth, classified as a potential luxury consumer group, are hesitant to open their wallets.
Meanwhile, Bernard Arnault, chairman of LVMH, is reported to be planning a visit to China at the end of this month. Although Arnault met Wang Wentao, China’s Minister of Commerce, in Paris last April, this will be his first direct visit to China. Fran?ois-Henri Pinault, chairman of Kering Group, which owns competitors like Gucci, already visited China earlier this year.
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