Investors may be feeling nervous about 2020 after luxury stocks did so well in 2019. The share price of industry leader LVMH went from €251 at the start of the year to €420 at the end of the year — a gain of about 65%. Surely it can’t get better than that?
Maybe not, but that’s no reason to turn bearish. Humanity is always on the march forward. Rich people want fewer possessions of a higher quality. The next decade for the luxury-goods industry will probably prove to be even better than the last one, so the wise thing to do is just to stay invested.
The share price of industry leader LVMH went from €251 at the start of the year to €420 at the end of the year — a gain of about 65%
The current tensions in the Middle East are a concern. Dubai is an important sales market for luxury-goods companies, and is located just across the Straits of Hormuz from Iran. A regional conflagration would not be good for business! It’s just that recent history suggests that this conflict is unlikely to escalate.
I’m more concerned about the situation in Hong Kong, where those on the streets demanding that their freedoms be maintained will not back down, but the autocrats in Beijing aren’t in a mood to concede ground either. I’d imagine that luxury-goods companies will have to develop more sales infrastructure elsewhere in China.
Tastes change and markets evolve, so there are sure to be winners and losers in the year ahead. The trick is to not be surprised that you’re surprised. Stay flexible, open minded, and positive.
• Theron is CEO of asset manager Vestact.
• From the February edition of Wanted 2020.