Bernard Arnault’s Fortune Is Soaring on China Stimulus—LVMH Is Another Story
Bernard Arnault, the founder and CEO of French luxury conglomerate LVMH, is climbing the rich list once again. His net worth has soared this week by $7 billion to $184 billion, bumping him ahead of Oracle co-founder Larry Ellison to become the world’s fourth wealthiest person behind Elon Musk, Jeff Bezos and Mark Zuckerberg.
Arnault’s good fortune is largely tied to recent economic developments in China, one of LVMH’s largest markets. Significant stimulus measures announced by China’s central bank earlier this week have reinvigorated LVMH’s stock price and renewed hopes for the country’s sluggish luxury sector as a whole.
The People’s Bank of China on Monday (Sept. 24) announced plans to cut interest rates in a bid to boost China’s beleaguered property sector and provide around $113 billion in liquidity to revive the country’s stock market. The move marks the largest stimulus package since the Covid-19 pandemic for China, which has struggled with slowed economic growth.
China has become a hub for high-end spending in recent years, with its luxury market tripling in size between 2017 to 2021, according to the consulting firm Bain. The nation’s economic downturn since the pandemic has severely dented the sector. LVMH’s sales in China fell 10 percent year-over-year in the first half of 2024 and 14 percent in the second quarter, the company reported in July, suggesting sales slowdown is accelerating. The conglomerate, which owns a slew of luxury brands including Louis Vuitton, Dior (CHDRY) and Tiffany & Co., reported that 31 percent of its 2023 revenue came from Asia (excluding Japan), a region dominated by China.
China’s recent stimulus measures are good news for “European companies that sell to the Chinese consumer,” especially “French luxury goods houses,” said Kathleen Brooks, research director at the brokerage firm XTB, in an analyst note. LVMH’s share price is up about 16 percent since Monday’s announcement.
Arnault, 75, has a 48 percent stake in LVMH and therefore has seen his fortune fluctuate dramatically over the years depending on his company’s market standing. At the beginning of the year, he briefly surpassed Musk as the world’s richest person.
It isn’t just LVMH that has benefited from China’s attempts to revitalize its economy. Other French luxury companies like Hermes, Kering, and BMW (BMWYY) are “leading the gains in Europe,” said Brooks. “If this stimulus package unleashes the power of the Chinese customer, then we could see French luxury and consumer goods companies rally into year-end.”