JPMorgan said luxury stocks often outperform over the following 12 months when consumer confidence is low, as it is now. According to Sina Finance, the bank's strategists, led by Mislav Matejka, said European luxury stocks have recently stabilized after underperforming the broader market by as much as 25% through May, but the rebound has been brief and the sector still trails the market.
The strategists said the Michigan consumer sentiment index has historically been followed by average outperformance of 9% and 12% for European luxury stocks versus the broader market after bottoming. They maintained an overweight rating on the luxury sector globally, citing potential wealth effects, and said South Korea is becoming a growth engine, while demand in China is expected to improve gradually as the macro environment stabilizes.
According to Sina Finance, the team also said global luxury industry growth has slowed by 3 percentage points so far in the third quarter of 2026 versus the second quarter, excluding September. They said the slowdown is most pronounced in the United States, Japan, South Korea and Macau, while tourism spending in the European Union has been relatively resilient.
The analysts kept buy ratings on LVMH, Hermès and Richemont, and said luxury demand recovery will be gradual rather than linear. They also said the sector's valuation has fallen back near its 10-year average, with a forward price-to-earnings ratio of about 25 times, and noted that LVMH is trading at a 25% valuation discount to peers.
Catherine
