Moritz Pott, CEO of Tema ETF, says the luxury goods market is at a critical turning point, with a clear divide emerging between traditional brands and aspirational players.
In an exclusive interview with Benzinga, Potts emphasized that luxury brands like Hermès International SA: Hesei and Ferrari NV race Companies backed by loyal and wealthy customers will outperform, while more ambitious companies such as LVMH-Moët Hennessy Louis Vuitton will outperform. LVMUY and Burberry Group plc. barbie It faces further vulnerabilities due to changes in consumer behavior and economic slowdowns in key markets such as China and Europe.
“Luxury brands are on the upswing, with increasing differentiation between true luxury brands and aspirational brands,” Potts said.
While many companies have underperformed, especially LVMH, which recently reported disappointing results, Potts stressed that these results are not surprising given the macroeconomic headwinds.
Mr Potts stressed that investors should now focus on the clear distinction between luxury brands and those catering to more discretionary spending.
China’s stimulus doesn’t save luxury goods outlook
Potts expressed skepticism when discussing the impact of China’s fiscal stimulus. He noted that although there was initial excitement about a potential market boost, the real beneficiaries of government spending are likely to be industries more central to China’s economic priorities.
“I think the luxury goods sector got a premature boost from the Chinese stimulus, but at the end of the day, it’s not a big enough boost to really justify it,” Pott said.
He stressed that the Chinese government is likely to prioritize domestic consumption over international luxury goods, raising questions about whether China-led demand will recover significantly.
India: The next growth driver for the luxury goods industry?
Another pressing issue was whether India could fill the gap created by slowing Chinese demand. Pott suggested that the rise of India’s middle class and growing economic power could be its next growth story.
“As China slows, will India’s luxury demand replace declining Chinese demand? That’s the key question for 2025,” Potts added, adding that brands such as Dior will He pointed out that India’s presence in the luxury goods sector is increasing.
“2024 will be a tough year for the luxury goods industry,” Pott said, “but there is reason to believe 2025 could be better, especially if India continues to emerge as a major luxury market. I think there is,” he added.
Tariffs and the US election: Potential impact on luxury goods
Looking ahead to the US election, Mr. Potts shared his thoughts on tariffs and their potential impact on luxury goods. He noted that while the tariffs do not yet directly target luxury goods, they could have an indirect impact, especially on industrial products such as cars.
“I think tariffs will focus more on industrial output than consumer goods, but luxury goods may end up getting involved,” he added.
Hold cash for push buying opportunities
Mr. Pott also shared insights into how the Tema Luxury ETF works. lux is well positioned to navigate changes in the luxury goods sector.
“Nearly 20% of the portfolio is cash,” he revealed, especially for discretionary luxury goods, which is larger than high-end, timeless brands such as Ferrari, Hermès and Compagnie Financière Richemont SA. The fund said it remains cautious given the hit. CFRUY.
“We’re focusing too much on really high-end luxuries and too much on discretionary luxuries,” he said.
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