CNY devaluation: Implications for our luxury sample

News published on August Monday 17, 2015
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Following the devaluation of the CNY last week, we review the implications for our luxury sample which is rather exposed to Mainland China (~10% of sales but ~15% if we consider Chinese clientele). Whilst this currency devaluation could probably impact negatively flows of Chinese tourists abroad, especially in Europe, and the earnings of luxury groups (transactional effect), the latter might be offset by a rebound in local consumption (favourable geographical mix) as the reduction in the price gap between Europe and Greater China could encourage Chinese customers to buy at home, like what happened in Japan after the fall of the JPY. As a conclusion, at this stage, this move does not call into question our FY est for our luxury groups and confirms our cautious view on the sector.

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