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Shares in LVMH ended the session down 7.1 percent at 265.30 euros on the Paris Stock Exchange, a six-month low, despite the group posting a solid performance in the third quarter that suggested it was immune so far to brewing uncertainty in Asia.

Shares in leading luxury firms including Kering, Hermès International, Moncler, Compagnie Financière Richemont and Swatch Group also took a hit, with traders pointing to the International Monetary Fund downgrading its outlook for the global economy, citing growing tensions over trade.

A Morgan Stanley note downgrading the E.U. luxury goods sector to underweight from neutral weighed on sentiment. “The sector looks stretched on a number of our indicators even after the recent correction,” it said. “A material slowdown in the Chinese consumer environment remains the biggest risk to the sector.”

The sell-off in Europe and Asia began last week as Chinese officials stepped up efforts to crack down on daigou shoppers during the Golden Week holiday, seen as a prime time for those intent on bringing home goods from abroad for resale.

Jean-Jacques Guiony, chief financial officer of LVMH, called the Chinese government’s actions “good news” for its brands.

“It’s not the first time that we see that. The Chinese authorities have some laws with regards to importation of goods and luxury goods. These laws are being enforced with more strength at some point in time, which is exactly what we understand is happening. There is nothing wrong with that,” he said in a conference call.

“It doesn’t prevent real tourists from purchasing goods outside China, and the Chinese purchases obviously benefit from a price gap which is quite narrow these days, so it may shift a little business — as we’ve seen in Q3 — from the traditional tourist destinations like Hong Kong and Macau to China,” Guiony added.

“The daigou business or the parallel business is not — let’s be clear — something that we welcome and that we try to promote. We limit the number of products that people can buy in stores, particularly in Paris, so that we don’t fuel parallel [markets] with our own actions in European markets, and we try to avoid this as much as we can. Obviously, there are limits to the control we can exert over that, but the fact that Chinese authorities are moving into the same direction is obviously good news for us, and I will not comment further,” he said.

The parent of brands including Louis Vuitton, Dior, Guerlain and Bulgari reported after the market close on Tuesday that revenues rose 10 percent to 11.38 billion euros in the third quarter, led by its key fashion and leather goods division. This represented organic growth of 10 percent, versus 11 percent in the second quarter.

Sales in Asia, excluding Japan, grew 11 percent in organic terms in the third quarter, versus 18 percent in the first half, but most of that drop reflected a correction in Macau and Hong Kong, where revenues at Vuitton and travel retailer DFS were up by more than 50 percent in the first half, Guiony noted.

“Yes there is a slowdown, which in my view is more a normalization than a slowdown, but we remain at pretty high growth rates in these areas for our main businesses,” he said. “We are still growing very fast in Asia.”

Growth in Mainland China was above 20 percent in the third quarter, up slightly versus the first six months of the year, while the offshore business was slightly weaker, Guiony said. However, he did not expect any corrections to the group’s pricing structure as a direct result of the customs crackdown.

“We have no problem whatsoever with price gaps. We think our customers understand the logic of it, which is obviously the difference in landing costs,” the executive said.

“A lot of comments are being made on [the] luxury industry, but it’s not unique to [the] luxury industry. I mean, you don’t pay a cellphone the same price here or in New York. It’s exactly the same, and the same logic, and we don’t intend to change that. It doesn’t mean that we will not adjust prices to get closer to our desired price gaps,” he added.

Sales in Europe rose 10 percent in the third quarter, versus 5 percent in the first half, fueled by the strong performance of the fashion and leather goods division, which advanced 14 percent in organic terms overall. Guiony pointed to the strong performance of Vuitton and Dior, in particular.

Revenues were up 9 percent in the United States, versus 10 percent in the first half. Bulgari took a slight hit as it rationalized its U.S. wholesale distribution, while Tag Heuer was struggling amid intense competition in the market for watches priced in its core range of less than $3,000, Guiony said.

Japan saw a more marked slowdown, with sales rising 10 percent in organic terms in the third quarter following a 17 percent jump in the first half, mainly due to a normalization of revenue growth from domestic customers, he noted.

Looking ahead, Guiony said he expected Chinese customers, who account for a third of the luxury sector’s sales, to remain key contributors going forward, although the market will remain volatile.

“For this client, the level of investment into luxury goods is probably higher in proportion to their income than it is in the Western world, so therefore when they feel good or bad on the economy and on their own situation, it has disproportionate consequences on their propensity either to purchase or not to purchase,” he noted. “So it’s a more volatile market, but a more dynamic market at the same time. We have the two sides of the coin.”

* ElringKlinger Upgraded to Hold at DZ Bank; PT 8.50 Euros

* Gamma Communications Upgraded to Buy at Peel Hunt