BArcap FX research published a piece yesterday (link) discussing the human tragedy of the current Ebola outbreak and the potential impact this could have on markets and the global economy. This note has a narrower scope, focusing on the potential impact on luxury trading. A comparison with the SARS outbreak of 2002-03 suggests that luxury stocks would see a short, sharp negative impact, with wholesale and hard luxury names the hardest hit and leather goods more resilient. Tourism is the main sensitivity, with 50% of luxury purchases influenced by global travel flows, according to LVMH. Clearly,
anything that disrupts tourism would be a negative for the sector, which is even more exposed to tourism today than in 2003 given a higher contribution from Chinese consumers abroad. This implies that Swatch and Richemont would be the most exposed fundamentally along with soft luxury wholesale driven models (e.g. Tod's, Hugo Boss).