LVMH loses 37.6%: The silent recomposition of global valuations
LVMH lost 37.6% on the stock market this year, briefly ceding its rank as Europe's largest capitalization to L'Oréal, while a Vietnamese holding company files its IPO in the United States. These opposing movements reveal a recomposition of global valuations, where investors arbitrate between European discount, Chinese fragility, and Asian promises.
Hook: LVMH has lost 37.6% on the stock market since the beginning of the year and briefly ceded its rank as Europe's largest capitalization to L'Oréal, while a Vietnamese real estate holding company files its IPO prospectus in the United States. Two opposing movements that tell the same story: the global geography of financial value is reorganizing, and investors are now arbitrating between European discount, Chinese fragility, and Asian promises.
Key Points
1. European luxury is falling, and it's not just a sectoral accident. The deterioration of Chinese demand has caused LVMH to drop 37.6% on the stock market this year, according to available market data. The movement has accelerated since late August, with a deceleration of growth in the second half of 2026. This is not a simple cyclical correction: it is a questioning of a valuation model that relied on a perpetual growth premium in Asia. Luxury houses have long been treated as high-margin defensive assets; their current discount signals that the market is reclassifying them among cyclical stocks exposed to a single demand driver. Hermès has undergone a similar correction, confirming that the phenomenon extends beyond the individual case of LVMH.
2. European and Asian indices are entering a phase of structural underperformance. The outlook for French, German, Swiss, Indian, and Chinese indices is bleak, according to available analyses. The common thread: increased sensitivity to long-term interest rate tensions, which primarily penalizes growth stocks and small caps. In other words, rising bond yields do not strike uniformly — they widen the gap between large established companies and the rest of the market, reconfiguring allocation strategies. The rise of ETFs in Europe, compared to traditional funds, accentuates this phenomenon by concentrating flows on large caps.
3. Private markets and IPOs are regaining momentum outside traditional major centers. A Cayman Islands holding company, operating digital real estate platforms in Vietnam via its subsidiary Meey Land, has publicly filed its IPO prospectus with the US regulator. It plans to list on Nasdaq under the symbol "MEEY", although the number of shares and the price range remain to be determined. In parallel, India's National Land Monetization Corporation has recommended asset monetization proposals exceeding 5,000 crore rupees, with an explicit call to accelerate execution. These two signals converge: states and companies are seeking to unlock cash value in a high-interest rate environment, where the cost of capital makes passive asset holding suboptimal.
4. Private equity and investment banking are expanding their scope beyond traditional transactions. A mergers and acquisitions specialist played a decisive role in organizing the Los Angeles Olympic Games, illustrating the increasing involvement of investment finance professionals in high-visibility infrastructure and event projects. This is not anecdotal: it reflects increased competition for mandates, where banks are seeking growth drivers outside traditional M&A advisory, in a cycle where transaction volumes remain constrained by the cost of financing.
5. Individuals are reacting to high interest rates by changing their savings behavior. People over 80 are increasingly turning to annuities, driven by rising rates, with an increase in purchases of large annuities. This is a leading indicator of what could become widespread across other age groups: when risk-free returns become attractive again, allocation to risky assets mechanically decreases, which weighs on long-term equity valuations.
Context
The 2020-2024 period established a low-interest rate regime that valued future growth and penalized conservative savings. European luxury, driven by Chinese consumption, had become the symbol of this growth premium. The rise in long-term rates since 2024 has reversed this logic: flows are shifting towards immediate-yield assets, and emerging markets that had benefited from financial globalization are now seeking to monetize their domestic assets rather than attract foreign capital. India, with its public asset monetization programs, illustrates this shift towards a more endogenous financing model.
Key Players
European fund managers are playing a contrarian card: they believe that certain European stocks are valued more advantageously than their American counterparts and present significant upside potential. Their thesis is based on a valuation gap which, if it narrows, would offer a superior return to that of American markets. Conversely, older individual investors are arbitrating towards annuities, which reduces demand for risky assets. Investment banks, for their part, are seeking to diversify their revenue sources by getting involved in infrastructure projects and global events. Regulators, finally, remain vigilant on governance structures and account transparency, as shown by recent work on board diversity and its impact on performance.
Data and Figures
According to institutional data, LVMH's 37.6% drop this year contrasts with the performance of bond markets, where high yields attract conservative capital. Available data show that annuity purchases by those over 80 are increasing, a sign that the opportunity cost of liquid savings has changed. In India, asset monetization for over 5,000 crore rupees represents a significant effort to unlock value from surplus land and buildings. Furthermore, recent weak signals point to high severity (4/5) in the areas of turbines, compressors, pumps, maritime, oil and gas, with a short-term impact timeline (2026-2028). These elements suggest that pressure on industrial supply chains could impact the financing costs of infrastructure projects.
Analysis of Stakes
In the short term (1-6 months), the underperformance of European and Asian indices is expected to continue if long-term rates remain high. Growth stocks and small caps will remain under pressure, while immediate-yield sectors (energy, utilities, finance) could attract defensive flows. European luxury, in particular, could see further downward revisions of expected earnings if Chinese demand does not stabilize. In the medium term (1-3 years), the recomposition of portfolios towards Asian assets outside China and towards private markets could accelerate. IPOs of Asian technology companies on US markets are expected to multiply, driven by the search for liquidity and visibility. Public asset monetization programs, as in India, could become a model for other emerging economies seeking to reduce their debt without increasing taxes.
Who wins? Bond investors and conservative savers, who benefit from positive real returns. Investment banks that diversify their mandates towards infrastructure and events. Asian digital platforms that access US capital markets. Who loses? Shareholders of European growth stocks, luxury-focused funds, and issuers who must refinance their debt at higher rates. The most affected sectors are luxury, listed real estate, and small-cap technology.
Forward-looking Assumptions
Scenario 1: Continued European underperformance (probability 55%). Conditions: long-term rates remain above 4% in the United States, Chinese demand does not recover before mid-2027. Indicators to monitor: quarterly results of luxury houses, net flows into European equity funds, yield spread between US and European bonds.
Scenario 2: Rotation towards emerging markets outside China (probability 30%). Conditions: stabilization of Indian and Vietnamese growth, moderate decline in US rates, announcements of structural reforms in emerging countries. Indicators to monitor: IPO volumes in Southeast Asia, foreign direct investment in infrastructure, privatization programs.
Scenario 3: Systemic shock in interest rate markets (probability 15%). Conditions: resurgence of inflation, sharp rise in long-term rates, major geopolitical tensions on maritime routes (Strait of Hormuz, Black Sea). Indicators to monitor: oil prices, risk premiums on corporate bonds, flows into money market funds.
Why it matters
This shift in valuations directly concerns you: if you hold an equity portfolio exposed to Europe or luxury, underperformance could last longer than expected. If you are saving for retirement, the rise in annuities changes the calculation between capital and income. And if you invest in emerging markets, Asian IPOs and asset monetization programs offer new opportunities, but with governance and liquidity risks. The question is not whether markets will rebalance, but how quickly and at whose expense. How long will European investors accept a discount that does not close?
This analysis was produced with the assistance of artificial intelligence, from institutional sources and verifiable open data. AI Transparency