Share prices for Europe’s three major watch groups rebounded today after they each lost more than 10% of their value over the past month and close to 20% since China devalued its currency on August 9.
Slowing economic growth in China caused a slump in global markets yesterday, wiping trillions of dollars off the value of the world’s biggest companies.
The correction has been dubbed the Great Fall of China by popular newspapers.
Even before yesterday’s stock market shock, Swatch Group, LVMH and Richemont were being sold by traders because of a slump in exports to China.
In last week’s report from the Federation of the Swiss Watch Industry, exports to China had fallen 40% in July compared to a year earlier. Sales to Hong Kong were also down 29%.
In July 2014, exports by Swiss watch makers recorded a 49% year-on-year rise.
“The China export number may be shocking on first glance, but it needs to be compared to the extremely high exports of last year,” Rene Weber, an analyst at Bank Vontobel AG in Zurich, told Bloomberg. “Chinese tourists travelled to Europe to buy more Swiss watches, so it shows the strength of tourism in Europe.”
France notched an astonishing 53.4% increase in imports of Swiss watches to CHF 153 million in July, making it the world’s third biggest market after Hong Kong and the USA.
Sales of Swiss watches to the UK declined just 5.7% to CHF 97.3 million, the ninth largest market in the world and only just behind China, which was worth CHF 102.1 million to Swiss makers in July.
Global exports from Switzerland fell 9.3% in July to CHF 1.9 billion.