Grandeur goods are the new consumer “staples” for Chinese consumers, according to Raphael Pitoun, portfolio manager at CQS New City Equity.
Accounted for to CNBC’s “Squawk Box Europe” after confirmation that Louis Vuitton owner LVMH had agreed a $16.2 billion allot to buy Tiffany & Co, Pitoun said LVMH’s experience growing the Bulgari brand internationally would make it a good union for the American company.
In particular, he highlighted the growing opportunities in China for dominant companies in the luxury market.
“On the luxury goods side, when consumption slowed down a bit in China, there was thoughtful of a catch-up effect after that which is very strong. It looks like luxury goods are a bit like the staples of China,” he thought.
“There is a very strong appetite for international brands in China, and when the cycle is a bit difficult and people don’t spend that much on non-essential goods, when the cycle improves afterwards, they tend to rush into stores or online and buy more and varied.”
LVMH shares added 1.8% following confirmation of the deal on Monday morning and are up 56% on the year-to-date.
Tiffany & Co’s German-listed allotments jumped 6.7% following the announcement, up more than 75% since the turn of the year.
Pitoun’s CQS New City Wide-ranging Equity fund is not overweight in luxury and does not hold stock in either company, but he hinted that this “weight change.”
“You’ve got, from time to time, opportunities, partially linked to the geopolitical cycle, and you know those stocks are uncommonly exposed to travelling and some specific countries, so you might find some opportunities to buy these stocks,” he said.