China tax measures and US spending decline pressure luxury market

The global luxury goods market, valued at approximately $350 billion, is facing significant pressure due to tightening tax measures in China and declining consumer spending in the United States.

Chinese authorities have mandated that wealthy individuals using offshore trusts to protect assets must disclose tax liabilities and settle outstanding debts by October 22. This 20% tax requirement is expected to prompt some high-net-worth individuals to delay luxury purchases. Given that Chinese consumers account for roughly 20% of global luxury spending, these measures impact major brands. Recent data shows a sharp slowdown in Chinese mall sales, with brands relying on prominent logos, such as Louis Vuitton and Gucci, underperforming compared to 'quiet luxury' brands like Loro Piana.

In the United States, luxury spending via credit cards has declined for three consecutive months as of September. While high-end jewelry has shown resilience due to increased demand for gold and precious metals, European luxury stocks, including LVMH, Hermès, and Kering, have seen notable declines this year. Markets are now closely watching upcoming financial results from major luxury groups to gauge the sector's ability to recover.