Shares in luxury retail giants LVMH Moët (MC) and Hermès (RMS) each rose nearly 10% on news that the Chinese government is taking steps to stimulate the country’s struggling economy.
Shares in LVMH Moët and Hermès rose 9% after reports that the People’s Bank of China announced a new stimulus package aimed at revitalizing the economy of the country of 1.4 billion people. LVMH Moët and Hermès are respectively known for their designer handbags and haute couture fashion, which are featured on runways around the world.
China is the world’s largest consumer market and a major driver of luxury goods sales. Shares of European luxury brands are trending higher as investors anticipate increased demand for their products in China as the economy recovers. To date, LVMH Moët stock had fallen 7% this year, while Hermès stock had risen 16%.
Rebuild China’s sluggish economy
China’s economy has been in steady decline due to the impact of the coronavirus disease (Covid-19) pandemic. For the past two years, consumer spending has retreated and the economy has suffered from a debt crisis in the real estate sector.
In early September, two prominent Wall Street banks, Goldman Sachs (GS) and Citigroup (C), each lowered their forecasts for China’s economic growth rate for 2024 to 4.7%. Goldman Sachs had previously predicted China’s economy would grow 4.9% for the full year, while Citigroup had forecast 4.8%.
The bank’s latest downward revision came after data showed China’s industrial activity slowed to a five-month low in August. Economists and market analysts have been urging Beijing authorities to introduce economic stimulus for more than a year. Stocks related to the country’s wealth are rising on news that the Chinese government is implementing economic stimulus measures.
Is LVMH Moe stock a buy?
LVMH Moe stock currently has a consensus rating of Moderate Buy among 16 Wall Street analysts. This rating is based on 10 Buy recommendations and 6 Hold recommendations made over the past three months. This stock does not have a sell rating. The average price target of EUR 778.00 (USD 867.14) implies an upside of 15.72% from current levels.
Read more about analyst ratings for Mitsubishi Corporation stock