UBS returns with bullish outlook on luxuries
Swiss bank UBS has published its first piece of research on luxury goods in six months and joined other analysts in delivering a bullish outlook for the sector in Europe.
UBS stopped its coverage of the luxury goods sector in May when its lead analyst left. But the Swiss bank has reinitiated its coverage of European luxuries with a 317-page report that has a "positively biased neutral stance reflecting the sector's strong absolute and relative performance".
Eva Quiroga, lead analysts on the report, said the sector will continue to perform well, fuelled by the "awakening of the metrosexual man" and the rise of the wealthy Asian consumer. She said: "Men will be increasingly important luxury consumers as their disposable income rises over time and the 'metrosexual man' continues to be awakened."
UBS joins a growing list of financial institutions, including domestic rival Credit Suisse and Dutch group ING, which have identified the luxury goods sector as a strong investment opportunity.
Swiss private bank Julius Baer has a luxury goods fund run by Scilla Huang Sun, head of equities in its asset management division.
The JB Luxury Brands Fund has returned 32% to its investors over the year-to-date. In comparison, the MSCI World index was up 16% at the end of October.
Huang Sun said luxury brand valuations are still attractively priced and will continue to outperform over the next two or three years. She said: "The long term investment case to support luxury brands – global wealth creation and pricing power – has not changed."
UBS' top picks are privately-owned French holding company LVMH, Swiss watchmaker Swatch and Swiss luxury goods company Compagnie Financière Richemont.
--write to twilkinson@efinancial news.com
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