Asian appetite for Swiss timepieces returns
2018 has been a great year for Swiss watches so far. The industry has seen stronger growth this year than it has for half a decade, largely down to a resurgence of demand from Asia. On Tuesday, the Federation of the Swiss Watch Industry reported that shipments rose by 13% year on year to $1.7 billion in January. That marks the ninth consecutive month of gains, and the biggest jump since October 2012, as Asia gears up for a later than usual Chinese New Year.
China and Hong Kong drive Swiss Watch exports higher in January
January is not the beginning of the Swiss Watch recovery story – last month’s surge in demand follows the first annual gain since 2014. That year marked disaster for Swiss Watch exports. China, long a driver of growth for the industry, saw President Xi Jingping’s austerity drive begin. The practice of gift giving, which Beijing curtailed, put a (huge) dent in the country’s demand for luxury timepieces.
President Xi Jingping isn’t solely to blame for the Swiss Watch industry’s downturn. The debut of smartwatches and a spate of terrorist attacks in Europe also contributed to it. Terrorism, however, only affects business for so long – markets and people are far more resilient than terrorists would like. And smartwatches have failed to capitalize on the interest they originally generated – it is also notable that a number of Swiss Watch companies have enetered the market, and may well wind up leading the trend forward.
Swiss Watch maker Richemont’s share price is up 20% over the past year
SOURCE: Yahoo Finance
Zuzanna Pusz, a Berenberg analyst, explained the significance of a strong January to clients in a note, saying: “While we note that the data in January benefited from a range of favorable factors, the sudden strong acceleration in growth, if continued, could confirm the beginning of a long-awaited restocking cycle among multibrand watch retailers.”
Dominion holds Richemont, one of the world’s largest Swiss Watch makers, in its Global Trends Luxury Fund.
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