Luxury Leaders Safe Gains
The European luxury sector had a rough start to 2024, with 18 out of 20 largest luxury stocks recording a YtD decline by the beginning of January. Bank of America recently provided insights into the sector's outlook for 2024, emphasising the significance of Chinese consumer behaviour. However, concerns were raised regarding challenges faced by turnaround brands. Analysts are emphasising that "Chinese consumption will make or break the year". Chinese luxury spending experienced a remarkable 50% surge in 2023, reclaiming a significant global market share. This trend is expected to continue, with an anticipated 10% increase in Chinese spending for 2024, constituting 80% of the sector's incremental revenues.
Despite a generally cautious outlook, Bank of America remains optimistic about certain companies. Hermes, known for its resilience in economic downturns, is identified as their top choice for 2024. Similarly, LVMH is viewed favourably despite recent stock declines. The company's diverse brand portfolio and strategic market positioning contribute to the appeal of its current valuations. Bank of America has set a price target for LVMH that exceeds current market prices by 32%.
We are presenting below a strategy that allows to take advantage of this cautious market outlook through a Bonus Note. This solution allows to participate in the stocks’ positive upside, while still benefitting from downside protection and receiving a bonus payment. The European Barrier is set at 80%, meaning that the investor benefits from 20% protection: if the barrier is not breached, the capital is paid back in full, and the investor receives a bonus of 5%. Moreover, if the underlyings performance is above the bonus level, the investor receives the uncapped participation instead.
The following stocks have been opted to elucidate on this investment idea:
Bonus Note | Product Snapshot
For informational purposes only. Not investment advice.
The European luxury sector had a rough start to 2024, with 18 out of 20 largest luxury stocks recording a YtD decline by the beginning of January. Bank of America recently provided insights into the sector's outlook for 2024, emphasising the significance of Chinese consumer behaviour. However, concerns were raised regarding challenges faced by turnaround brands. Analysts are emphasising that "Chinese consumption will make or break the year". Chinese luxury spending experienced a remarkable 50% surge in 2023, reclaiming a significant global market share. This trend is expected to continue, with an anticipated 10% increase in Chinese spending for 2024, constituting 80% of the sector's incremental revenues.
Despite a generally cautious outlook, Bank of America remains optimistic about certain companies. Hermes, known for its resilience in economic downturns, is identified as their top choice for 2024. Similarly, LVMH is viewed favourably despite recent stock declines. The company's diverse brand portfolio and strategic market positioning contribute to the appeal of its current valuations. Bank of America has set a price target for LVMH that exceeds current market prices by 32%.
We are presenting below a strategy that allows to take advantage of this cautious market outlook through a Bonus Note. This solution allows to participate in the stocks’ positive upside, while still benefitting from downside protection and receiving a bonus payment. The European Barrier is set at 80%, meaning that the investor benefits from 20% protection: if the barrier is not breached, the capital is paid back in full, and the investor receives a bonus of 5%. Moreover, if the underlyings performance is above the bonus level, the investor receives the uncapped participation instead.
The following stocks have been opted to elucidate on this investment idea:
Bonus Note | Product Snapshot
For informational purposes only. Not investment advice.