The Wednesday Letter 182 - 23 August 2023

THIS WEEK: China Exposure; Reshoring Construction Boom; BRICS Summit; NVIDIA Name; Tweets and Charts; S&P Sectors Update.

CHINA EXPOSURE

We mentioned in last week's WL 181 the stalling of the Chinese economy. Its post-covid revival has so far failed to materialize. A weaker Chinese economy will have important consequences in many places, including in the financial results of many corporations. It is well-known for example that purveyors of luxury goods have amassed huge profits in recent decades by increasing their presence in China and by selling to Chinese tourists traveling through Asia, Europe or other regions. The weakening of the Chinese economy is now filtering to these companies and to their values in the stock market.

European companies are especially dominant in luxury goods thanks to LVMH, Kering, Hermes, Richemont, Swatch, Burberry and others. The table below shows for each of these companies the percent of revenues from China ex-Japan and the decline in …