“The current values of luxury are high, but justified: and if the economic scenario remains this, as predicted and with China growing at at least 7%, the situation will not change in the next two years". To explain the boom in luxury stocks, in Piazza Affari but not only, is Gian Luca Pacini, analyst at Banca Intesa Sanpaolo, which two years ago worked (together with other banks) on the listing of Salvatore Ferragamo in Milan and Prada in Hong Kong: “Prices now are even higher than pre-crisis ones: this is due to the market of emerging countries, which since 2008 has more than compensated for the uncertainty associated with the subprime crisis by spending and investing heavily in luxury, especially in the more recognizable brands which in fact are the ones that are doing better”.
It is a paradox, if one thinks of the international crisis of recent years, but it is like this: the more the product has a prestigious brand and the more expensive it is, the better it goes. Thanks precisely to the "new rich" of emerging countries, in particular Russians and Chinese, who not only buy at home, but thanks to their new economic opportunities, they also do much more tourism saving the domestic markets of European countries (where they spend even less in taxes). In particular in Mediterranean European countries, including Italy, which has always attracted visitors in search of status symbols. “That is why – explains Pacini – the turnover of the global luxury market (estimated by Altagamma at 250 billion euros worldwide) is growing by more than 2 times that of the global GDP: in the last 2-3 years we have reached a ratio of 2,67, thanks to the driving force of a new market that was not there before, which has the possibility of spending and is very prone to ostentatious money and the brand”.
A market that in the new emerging markets has also fully absorbed the middle class and young people, counterbalancing the contraction of incomes in mature markets, those of Western countries, which have instead seen the so-called "aspirational consumption" disappear in the middle class, who now makes more rational and aware purchases. “This has led – continues the Intesa analyst – to a stabilization of the ratio between world growth and the growth of the luxury sector just recently, in August: now we are at 2,48”. Which remains a very high figure, higher than the pre-crisis period and apparently fully corresponding to the period of health of the sector, which at the moment does not show any signs of reversal.
So here is that the turnover of the Italian fashion houses continues to grow, more or less, not to mention the share values: in the last year Ferragamo boasts a +49%, Tod's +59%, Luxottica just over +46%, but even better they make the rookie Cucinelli with +83%, Safilo with +118% and Yoox with +182%. Where does this trust come from, in absolute contrast, and above all will it last? “It derives from the fact that emerging countries, even if they have slowed down slightly, continue to offer ample protection to luxury investors: profits, especially those of the two main players such as Kering (formerly Ppr) and Lvmh, whose immense cash gives a further boost to the sector, they are solid and visible, also thanks to M&A operations, and give credibility, low risk and little volatility".
At the moment, therefore, there is no bubble risk. “As long as the scenario remains this, and that is if China continues to grow by at least 7% how it is doing and how it is expected to continue doing, the multiples of luxury will continue to be higher than the average of the stock market".
