With expectations of a recovery in Chinese consumption pushing up, HSBC has raised its ratings for LVMH and Kering Group, leading to a rise in European luxury goods stocks.

After HSBC Holdings raised the ratings of luxury goods industry giants LVMH Group and Kering Group due to the potential brought by the recovery of Chinese consumption, European luxury stocks rose on Tuesday. Data showed that LVMH Group's stock price rose by 4% at one point, and Kering Group's stock price rose by nearly 5%. A basket of luxury stocks led by Goldman Sachs rose by 2.4% at one point, although it is still more than 20% lower than its historical high in February. Led by analyst Erwan Rambourg, the HSBC analyst team upgraded the ratings of these two stocks from "hold" to "buy," saying that both companies are expected to achieve sales recovery for the remainder of this year and "return to reasonable and profitable growth in 2026." The analysts stated, "Although U.S. consumers face short-term obstacles in the fourth quarter, we believe Chinese consumers will be more actively engaged, both of which will drive better growth next year." For LVMH Group, HSBC analysts believe that the company has the opportunity to streamline its cost structure and achieve higher long-term profit margins. They also expect that under the leadership of the new CEO, Luca de Meo, the related risks of Kering Group's stock price will be reduced. The optimism of HSBC towards LVMH Group and Kering Group also boosted the stock prices of other competitors, including Swiss watch giant Swatch Group AG, Italian cashmere brand Brunello Cucinelli SpA, and Swiss luxury company Richemont. However, Hermes International SCA's stock price did not benefit from this trend, as the stock price fell by 1.2% after HSBC downgraded its rating from "buy" to "hold." Analysts believe that the sales growth of this platinum bag manufacturer for the remainder of the year will not accelerate, although they still consider Hermes to be "a much better company than others in our coverage universe."