European luxury retailers are getting hammered again on Wednesday.
That’s largely down to the Peoples’ Bank of China (PBoC), which announced a second devaluation of the yuan, adding to Tuesday’s cut.
That should provide some stimulus (though not very much) to China’s ailing economic growth, but it will do so at the expense of European exporters.
Cutting the value of the yuan effectively makes Chinese yuan-denominated goods cheaper on international markets, and goods denominated in other countries more expensive in China.
Europe’s luxury products, from expensive cars to fashion brands have done well among China’s growing elite, but the PBoC has effectively reduced their ability to buy goods from abroad.
Here’s BMW on Wednesday morning. You can see the double dip there, from the first and second devaluations:
It’s not the only car company doing badly, Daimler is down another 3.69% after falling by more than 5% on Tuesday. Continental is down 3.09% after a 4.5% fall on Tuesday too.
And it’s the same pattern for LVMH, the French holding company that owns Moet, Hennessy and Louis Vuitton, all brands that have captured China’s growing class of wealthy spenders:
Italian luxury retailer Salvatore Ferragamo is also down 2.91% after falling 5.5% yesterday.