Coronavirus Fears Particularly Hard On Luxury Brands

Several market sectors have been hit particularly hard by the fears over the impact of the coronavirus on the global economy and especially the Chinese economy. One of those groups is the luxury brands, and investors might be getting the chance to pick these normally high performing stocks up for a bargain.

Because China and Hong Kong account for one third of sales for many of the European luxury brands thir stocks are now taking a hit on fears the coronavirus will be a serious setback to the Chinese economy in 2020. These stocks are already downtrodden in many cases in response to the ongoing Hong Kong protests.

Since last week shares of Burberry are down roughly 15%, LVMH is nearly 10% lower, and Financiere Richemont, parent company of Cartier, Van Cleef & Arpels, has seen its shares drop more than 10%.Hermes International was holding up better with a 3% loss through January 24, but Monday’s fall of 4.7% is bringing the stock in-line with losses for other luxury brands.

All of this likely means investors are now able to pick up these stocks on sale. And it could be a good move as historically the group is a very high performing one. Data shows that over the past 12 years the MSCI Europe Textiles, Apparel & Luxury Goods index has had an annual return of 13.5%, easily outpacing the 10.4% return from the S&P 500 over the same period.

The top constituents of that index are LVMH, Burberry, Hermes, and Richemont. Investors might want to consider those names as top picks in the near future.