Weekly News Wrap: Luxury stocks rally from China reopening; Australian retailers take hit from hesitant consumers
And JD.com to shut down Indonesia, Thailand shopping sites.
Stocks of many luxury fashion houses reliant on Chinese consumers rallied on China’s reopening, but those customers may not necessarily be buying the goods overseas.
In the past, trips abroad often included personal luxury purchases for affluent Chinese consumers looking to take advantage of currency and tax benefits.
Shares of LVMH have gained around 12% since early December when Beijing started rolling back its zero-Covid policies.
Similarly, Cartier-owner Richemont shares have gained about 13%, while Dior rose more than 11% from early December.
The “revenge spending” that comes with the return of overseas travel will lead to an increase in consumption of luxury goods in 2023, Jessy Zhang, an analyst from Daxue consulting told CNBC.
READ MORE: Luxury sales in China to rebound to 2021 levels this year
Australian retail sales declined for the first time in 2022 in December, suggesting consumers are beginning to rein in spending in response to rapid inflation and rising interest rates.
The currency and bond yields slid as sales tumbled by a larger-than-forecast 3.9%, the biggest fall since August 2020, data showed Tuesday. The result came after November’s gain was revised higher to 1.7% as consumers brought forward Christmas spending to take advantage of Black Friday discounts.
“It was a shocking number,” said Diana Mousina, senior economist at AMP Capital Markets which had predicted a 0.5% drop. “Cost of living pressures are starting to bite but I still don’t think this is enough to get the Reserve Bank to hold next week.”
Chinese online retailer JD.com Inc. is closing its Indonesia and Thailand e-commerce sites as the company shifts its overseas strategy toward supply-chain and logistics services.
JD.ID in Indonesia will stop accepting orders from mid-February and all services will be stopped by the end of March, while JD Central in Thailand will cease its operations from March 3, according to statements on the businesses’ websites.
The company, Alibaba Group Holding Ltd.’s biggest rival, is pivoting its international businesses toward services such as supply-chain management and warehousing. It is among Chinese tech giants that are curbing spending to weather slowing growth caused by three years of Covid restrictions and the government’s crackdown on powerful internet firms.
“JD.com will continue to serve the global markets, including Southeast Asia, through its supply chain infrastructure,” the company said in an email.