China devalued its currency by 2 percent after a run of poor economic data – a move some economists think could herald a longer-term slide in the exchange rate. The downward move was the biggest since a massive devaluation in 1994, and appeared to reverse a previous strong yuan policy.
Investors were quick to bet companies like Louis Vuitton holding company LVMH, Gucci owner Kering and L’Oreal could suffer. The stocks were among the biggest fallers on the Paris stock market, dropping between 1.5 and 4 percent. The companies declined to comment.
Chinese tourists have been spending record amounts on luxury goods this year, VAT-refund company Global Blue said in a report published in April. For European destinations, the weak euro has been a big draw. Analysts reckon Chinese luxury spending accounts for as much as 45 percent of the global market – up from effectively zero a decade ago. Chinese account for well over a third of total European luxury spending.