French Billionaire Gains $17 Billion Amid China’s Economic Stimulus Boost
Bernard Arnault, chairman of French luxury conglomerate LVMH, saw his wealth surge by $17 billion in a single day, thanks to China’s latest economic stimulus measures aimed at reviving growth. This comes after a series of announcements from Chinese leadership designed to restore confidence in the country’s struggling economy, which had been dampening demand for high-end goods.
The unexpected economic stimulus has sent global markets soaring, with China and Hong Kong stocks experiencing their best weekly performance in over a decade. Arnault, who started the day as the billionaire with the largest wealth decline this year, saw his fortunes change dramatically as LVMH shares surged nearly 10% on the Paris stock exchange. By the end of the day, Arnault’s net worth stood at $201 billion, marking his third-largest single-day increase, according to the Bloomberg Billionaires Index.
LVMH had been facing challenges in the Asian market, particularly in China, where sales had dropped 10% in the first half of 2024 compared to the previous year. The region, dominated by Chinese consumers, accounts for 31% of LVMH’s total revenue. The recent downturn in China’s economy, driven by weak consumer spending, a prolonged property slump, and rising local government debt, had severely impacted luxury brands like LVMH.
However, China’s fresh economic policies—deemed the long-awaited “bazooka” stimulus—have rejuvenated market optimism. Analysts at Nomura noted that Beijing appears determined to implement large-scale fiscal and monetary measures to combat the economic slowdown. This includes targeted support for low- and middle-income citizens and the struggling property sector.
Market Surge Following Stimulus Announcements
China’s economic boost came after a meeting of the 24-member Politburo, chaired by President Xi Jinping, where leaders pledged to introduce counter-cyclical policies aimed at stabilising the economy. Earlier in the week, the People’s Bank of China (PBOC) announced several measures to inject liquidity into the financial system. These included a cut in the seven-day reverse repo rate from 1.7% to 1.5%, along with a reduction in the reserve requirement ratio for banks by half a percentage point, freeing up about 1 trillion yuan ($142 billion) for lending.
Additionally, the PBOC introduced mortgage relief measures, lowering down payment requirements for second-time homebuyers to stimulate the property market, which has been in decline since 2019. Despite these moves, experts caution that further steps are needed to stabilise the property sector, which once contributed up to 30% of China’s economic activity.
As a result of these actions, Hong Kong’s Hang Seng Index has risen by over 12% this week, while China’s blue-chip CSI300 index has gained more than 15%, marking their strongest performances since 2008.
While China’s economic troubles have weighed heavily on Western luxury brands, the stimulus announcements have reignited investor optimism, and Arnault’s LVMH stands poised to benefit from renewed consumer demand in the region.
