The Luxury sector evolution

After accomplishing one year of Eurodeal´s luxury index, I think is a good moment for making an analysis of the evolution, and discuss certain aspects that compose it.

As I had indicated in other articles, the European economy has maintained under the statements, in greater measure, and in the European Central Bank small performances. The fall in the oil price, the tensions between Russia and Ukraine and the growth exhaustion in the emerging countries has marked the economy future in the 2014 and, how couldn´t be otherwise; they leave a number of uncertainties for the current year.

To stock-exchange level, in Europe, has been a good year. After a few years of entrepreneurial benefits contractions, 2014 has ended positive. Evidently, after a strong first semester of the year, our expectations were larger than the ones that have taken place. It´s appropriate to say that thanks to the entrepreneurial expenses discount, these results have put “makeup” on, to end the year correctly.

In this sense, the 35 Ibex was revalued a 3,67%, leaving, in the second half of the year, over a 6%. The 50 Eurostoxx ended the year in 1.20%, also with an unlucky second semester, with falls over the 3.50%. Conversely, the American stock-exchange, supported by a more advanced in the economic circle economy, blasted off in the second semester of the year, to end with good increased value. So, the Dow Jones, was revalued in a 7,52%, with an increase in the second semester over a 6%.

Our luxury sector has beaten all the global stock market indexes. So, the luxury index Eurodeal-The Luxonomist, has obtained a annual profitability of the 14,76%.

It´s recall that this index was created and developed as a reliable indicator to analyze the sector behavior and have a tool that provides us “patterns” of behavior for you, the readers, with high-quality standards and exclusiveness. The actions that compose it are 26 companies, of high liquidity and pondered for their market capitalization.

Thereby, the three companies that have better behaved in the index are:

• ALLERGAN: Has obtained a profitability of the 116,96% in Euros, and a 92,77% in Dollars. It is recall that after a year of amorous dalliances with Valleant , Actavis has acquired the company, last November, for the amount of 66.000 million dollars.
• ROYAL CARIBBEAN: Second cruise operator worldwide, the profitability in Euros has been of the 96,68% and of the 74,75% in Dollars. Great evolution of the company, taking into account, the negative effects that is having Ebola´s outbreak in the global touristic sector.
• MARRIOT: The hotelkeepers luxury companies icon, thanks to the good results and to the aggressive politics of expansion (more than 200 new hotels in the next years), has obtained a annual profitability in Euros of the 82,16% and of the 59,38% in Dollars.

Conversely, the tree companies that have worse behaved have been:

• MONCLER: The results, well below the expectations of analysts and the own company, have meant a fall of the -31,02%
• PRADA: The Italian company has entered into a spiral of bad results and worst expectations. The business has deteriorated considerably, throughout 2014, with falls in their sales. For this reason, the quote of action has fall in a -29,67% in Euros. In Dollars, the situation rages falling a -36,85%.
• SALVATORE FERRAGAMO: With a fall of the -26,10% due, fundamentally, to its high dependence on Chinese market.

In brief, great year for the luxury sector, while, the view for the next year, are uncertain. Even if, in a generalist way, the crude´s price falls, favored by the reduction of the cost, all the sector companies, the deceleration of the Chinese economy and geopolitical actual and future tensions, are the executor pillars of the price volatility evolution. 

Value Technical Analysis:

As we discussed in the weekly  inform, taking a look into the tendency and relative force indicators, we can glimpse the possibility of a consolidative and continuation formation of the uptrend, while, I think we will attend high volatility weeks , before seeing new historic tops.

Only new historic tops in the next days will make us accelerate our index bullish view.

In regard to Ichimoku, the positive cloud has been expanded with the rebound, what strengthen such movement. As we can observe, the top of the cloud is being support to the index prices.

In brief, we maintain our long-term bullish perspective, even if, we don’t reject, in face of a possible triangle formation, a high volatility and, accordingly, the consolidation of the actual levels. That is to say, a short-term, we don’t dismiss bullish and corrective movements, taking, the market, certain calm before obtaining new tops.

“A lucid mind and a good heart accompanied by warm feelings are the most important things. If the mind is not directed to positive and high thoughts, we will never find happiness”, Dalai Lama.

Analysis: Miguel Angel Abad Chamón, Minister of Eurodeal SV maabad@eurodeal.es

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