Investors Get Comfy in China's Lap of Luxury
这篇文章比较简单，基本follow了很多期的坛友都可以不用怎么查词就能懂，不过因为上半年的欧洲债务危机，日本地震和美债违约风险占了太多空间，所以这次选择了中国的奢侈品市场作为主题发布，换换口味咯~~
Prada's listing and China's first luxury-focused fund point to the growing influence of upscale consumers
Stock and mutual fund investors are catching the sparkle of what some industry analysts call diamond-studded demand growth for luxury consumer goods in China.
Certain chapters of the China luxury story appear to be hyped, and global economic uncertainty tied to sovereign debt crises and an earthquake in Japan may have slowed conspicuous consumption in recent months in Asia.
But China's emergence as a market for upscale handbags, jewelry, clothes and fine wines appears certain to many of the global luxury companies that have been raising funds on the Hong Kong Stock Exchange and opening mainland outlets.
Luxury handbag retailer Milan Station listed on the bourse for the first time May 23, and Italy's fashion brand Prada followed suit June 24. And U.S. handbag maker Coach and British fashion giant Burberry are expected to float stock in Hong Kong in the future.
Most of these companies are more interested in promotional and image tailwinds from a Hong Kong listing than actual fund-raising, said an investment bank source.
Prada CEO Patrizio Bertelli put it this way: "An IPO's location represents the market where we're heading."
Indeed, the day before its Hong Kong stock launch, Prada opened a shop in Wenzhou and sold out limited-edition handbags priced at 20,000 yuan apiece.
Mainland investors have responded to the trend by, for example, pouring into the Fullgoal Global Top-Level Consumption Goods Stock Fund, the first mutual fund in China focusing on the global consumer luxury industry.
The fund's sponsor, Fullgoal Fund Management Co., announced July 8 the end of its investor recruitment and fund-raising period. It will now use the 373 million yuan raised to invest in manufacturers and marketers, services for wealthy consumers, and suppliers of precious gems and metals.
The brokerage CLSA Asia-Pacific Markets is forecasting 25 percent annual growth for luxury market revenues in China over the next four years. Overall, CLSA says, China's consumer market is expected to grow 12 percent annually over the same period.
How Big?
Data on where the Chinese luxury market is and where it's going can be fuzzy.
Official Chinese media has widely quoted an organization called the World Luxury Association and its recent prediction that China would overtake Japan in 2012 as the globe's largest market for luxury consumer goods. The media also quoted the association as saying China is the world's fastest-growing luxury market, expanding 25 percent last year and 16 percent in 2009.
Other market data says the value of the global luxury goods market had climbed to 172 billion euros by the end of 2010. And over the next decade – in part thanks to Chinese consumption – global consumption is expected to exceed 350 billion euro.
Other statistics supporting luxury sales growth suggest the rich are getting richer in China. According to the consulting firm Roland Berger Strategy Consultants, more than 250,000 Chinese consumers had personal assets exceeding 10 million yuan in 2008. This number likely grew to 380,000 last year.
Rising luxury demand is also explained by many economists who cite a relationship with per capita income and consumer habits. They say a consumer luxury rush begins in a developing country after its per capita income exceeds US$ 1,500. Demand accelerates when per capita hits US$ 2,500, the economists argue.
China's per capita has just exceeded US$ 3,000 and is expected to continue climbing thanks to a fast-growing economy.
Zhang Shaokun, a researcher at the Financial Research Institute of AVIC Securities, said the expanding middle class in China provides strong supports for the growth of luxury market.
Investment Magnet
The Dow Jones Luxury Index, which measures the performance of luxury stocks listed on the New York exchange, rose to a record high in June at a sluggish time for global markets in general. The index rose 11 percent in the first half of this year and has climbed nearly 50 percent since mid-2010.
To benefit from this surge, Fullgoal Management launched a high-end consumer goods fund for investing globally through China's QDII program, which lets Chinese retail investors access overseas equities.
An industry source told Caixin the number of individuals participating in the Fullgoal fund is relatively high, underscoring general enthusiasm among retail investors in China for the luxury segment.
Li Jun, an overseas investment analyst at Fullgoal, said luxury goods stocks have now reached a valuation sweet spot.
"The price-to-earnings ratio of luxury goods companies is currently around 18," Li said. "This shows a marked advantage compared with the valuation of A-share market" stocks on the Shanghai exchange.
"For example, the P/E ratios for (German carmakers) Porsche and BMW over the past 12 months was about 9 and 9.9 times, respectively," Li said.
Luxury investing is not without risk. But Li says the basic consumer sector will usually suffer in a natural disaster or during a financial crisis long before the luxury market declines.
In the months since the Japanese earthquake in March, Li noted, "sales of high-end consumption goods have notably recovered in Japan. This shows that the impact of natural disasters on the consumption of luxury goods is very short-lived."
Moreover, Li said, luxury goods companies enjoy limited competition, strong pricing power, and less impact than other sectors when raw materials and labor costs increase.
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