LIVE MARKETS-UBS trip flags 'L-shaped' rebound for China luxury

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UBS TRIP FLAGS 'L-SHAPED' REBOUND FOR CHINA LUXURY

UBS wrapped up a luxury field trip last week across key Asian cities - including Shanghai, Wuxi, Suzhou and Hong Kong - returning with cautiously optimistic message from China's consumer market after two challenging years.

Meetings with private and listed companies in the luxury, sportswear and beauty sectors confirmed improving trends since June, supported by stock market gains and government stimulus.

However, UBS notes the outlook remains uncertain, with most companies expecting an "L-shaped" recovery amid persistently cautious sentiment.

Crucially, the Swiss bank flagged a shift in consumer behaviour, particularly among younger buyers, who are more selective and less confident about future income.

"This shift in attitude towards luxury consumption requires brands to justify the prices for their products," UBS said.

Luxury is no longer seen as a simple penetration play, it added, and brands must work harder to engage younger generations and offer compelling experiences.

Retail formats also need rethinking: destination stores like Louis Vuitton's "The Louis" in Shanghai are outperforming traditional outlets. UBS sees jewellery outperforming accessories, which face oversaturation and growing second-hand competition.

(Danilo Masoni)

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