EU Luxury: From China Proxy to Catch-Up Play

Signs of life in luxury

1. China Correlation Gap: European luxury has not participated in the recent China equity rally, despite historically trading as a “China proxy,” suggesting room for catch-up.

2. Underweight Positioning: The sector was heavily sold down over the past year on China/earnings worries and used to fund other rotations; current positioning sits at the 36th percentile, leaving scope for re-allocation.