Business

Lunar New Year lets luxury brands woo China’s big spenders

Luxury brands from Harry Winston to Loewe are going all in on Lunar New Year collections in a bid to attract Chinese customers.

Ahead of the Year of the Horse, which starts on Tuesday, Harry Winston unveiled a limited-edition, $81,500 rose gold watch with diamond bezels and a red lacquer horse. High-end fashion brand Chloé released a capsule collection, ranging from $250 silk scarves to a $5,300 snakeskin and leather shoulder bag with a horse head and tail linked by a horsebit chain. A slew of other brands, including Loewe, Gucci and Loro Piana, have introduced new bag charms with horse motifs.

The Year of the Horse arrives at a time of cautious optimism for designer brands and could mark the start of a China’s luxury market comeback.

Chinese consumers were once the primary driver for the global luxury sector but have cut back sharply in recent years, weighed down by the country’s slowing economy and depressed housing values.

The Chinese luxury market stood at about 350 billion RMB in 2024, or about $50 billion, according to estimates from Bain. While the consultancy estimates that market contracted by 3% to 5% in 2025, Bain analysts noted that the sector started showing signs of recovery in the second half of 2025 on the back of stronger stock market performance and consumer confidence.

Bernstein senior analyst Luca Solca said he predicts Chinese luxury spending will stabilize, forecasting mid-single-digit percentage growth in 2026. However, the market is still far more competitive than at its peak, he said.

Before the Covid pandemic, Chinese consumers accounted for about one-third of the global luxury goods market, according to Solca. That percentage has since dipped to about 23%, he said.

The luxury market’s fortunes do not solely rest on Lunar New Year, but it is an opportunity for Western brands to show respect for Chinese culture, he said.

The annual holiday is associated with the colors red and gold, which symbolize good luck and fortune in Chinese culture. Each Lunar New Year is represented by one of 12 Chinese zodiac animals. Last year’s animal was the snake.

But Solca said in order to best capture the Chinese luxury consumer, brands need to go beyond the expected motifs.

“The Chinese are no longer in awe of anything that comes from the West,” Solca said. “A perfunctory interpretation of CNY is not going to go far.”

Veronique Yang, who leads BCG’s consumer practice in Greater China, said literal interpretations can come across as lazy or even disrespectful to Chinese consumers. Younger shoppers are also looking for fresher takes, she said.

“Chinese young people, they respect the old Chinese culture, but to be honest, a lot of parts of it they don’t understand, or they want it to be reinterpreted in a modern way,” she said. “It’s important to weave a narrative that connects the heritage with a contemporary vision.”

Lunar New Year collections date back to the early 2010s, as Western brands were eager to tap into the rapidly growing Chinese luxury consumer market, according to Daniel Langer, professor of luxury strategy at Pepperdine University. At the time, newly wealthy Chinese consumers were eager to spend on designer goods, especially when they traveled abroad, he said, as there were few luxury boutiques in China outside major cities like Shanghai and Beijing.

Now, with broader access and more choice, brands have to work harder to bring in new clients.

And in the 12 years since the last Year of the Horse, Chinese high-income consumers have become more discerning, Langer said.

“They’ve been to the best places in the world. They’ve dined in the best restaurants in the world. They’ve shopped in the best shops in the world. Their expectations towards brands are significantly higher,” he said. “China has completely changed from a country where there was pent up demand for luxury goods to a country of the highest sophistication.”

They also have grown accustomed to spending less on Western brands between pandemic travel restrictions and the rise of domestic high-end labels, according to Langer.

Before the pandemic, Chinese consumers did most of their luxury shopping abroad. Pandemic travel restrictions permanently changed that dynamic. According to Bain, two-thirds of Chinese luxury goods spending was done abroad in 2019. Last year, overseas spending made up only a third.

The Year of the Horse provides a natural opportunity for a sizable number of Western brands to connect to the holiday. Langer said he preferred brands who take a less literal approach, such as Loewe, which adorned its signature Puzzle bags with fringes and tassels for a cowboy aesthetic.

Yang noted, however, that the year’s zodiac animal is a good luck symbol only for people who were born in that year, which makes playing too much into horse imagery a risk.

Instead, she said, brands can use immersive experiences to connect to Chinese customers, especially younger ones, in a more authentic way.

Valentino, for instance, held a three-day lantern festival in January at Tianhou Palace, a historic temple along the Suzhou Creek in Shanghai. Burberry launched an extensive Lunar New Year campaign in mid-December, with Chinese brand ambassadors and a pop-up boutique and ice rink in Beijing.

“There’s a lot of different cultural elements that you can integrate and build a narrative around,” Yang said. “It’s not only about animals.”

CNBC

Business

Luxury Shares Drop on Middle East Conflict Fears

Luxury stocks were among the hardest hit sectors early Tuesday, with European markets heading for another day of losses as the conflict in the Middle East intensified overnight.

Shares of conglomerate LVMH, Gucci-owner Kering, and British outerwear maker Burberry were among the worst performers, with week-to-date losses approaching 10% each. The wider European blue-chip index, Stoxx 600, was down nearly 3% Tuesday, after falling 1.6% on Monday.

The Middle East has been a driver of growth in the sector, which is battling a difficult macroeconomic backdrop, and many formerly best-selling brands are struggling to resonate with consumers.

The region’s strength, however, hasn’t been enough to offset weakness elsewhere, notably in China, and industry giants like LVMH and Kering are still struggling to get sales back on a positive track.

“The Middle East has been one of the few bright spots,” Morningstar analyst Jelena Sokolova told CNBC. “You have one area which was small, but which was very, very vibrant, and it’s being affected now.”

The U.S. and Israel launched widespread attacks on Iran over the weekend that killed the country’s Supreme Leader Ayatollah Ali Khamenei. Iran responded with retaliatory strikes, and the conflict now engulfs the wider Middle East region with no clear endpoint in sight.

U.S. President Donald Trump has said the war could last for four to five weeks, but that it could go on “far longer than that.”

Shares of Richemont, the owner of Cartier, Van Cleef, and Chloé, fell heavily on Monday and Tuesday, with a relatively big exposure to the region.

But even with Middle East revenue exposure on average in the mid- to-high single digits for luxury brands, repercussions could spread if a conflict lasts for weeks or even months.

“If people don’t go back to normal, and we have more issues when it comes to sourcing oil and gas from the Gulf, then the probability of a recession globally could be increasing, and that would definitely dampen discretionary sectors like luxury,” Bernstein analyst Luca Solca told CNBC.

If the war carries on for another six months, during which oil is significantly disrupted, “then this is very bad news,” he added.

The ‘feel good’ factor

Luxury stocks come under pressure during times of heighted geopolitical and economic uncertainty because demand typically requires a “feel-good” backdrop and supportive consumer confidence, analysts say.

“Luxury demand relies on positive consumer confidence and constructive outlook of one’s future prospects, as well as the consumer experience which is often less transactional and more emotional,” RBC Capital Markets analysts wrote in a note to clients on Monday. “Conflict, shock, uncertainty and fear are not helpful in this context and can have a shortterm impact on luxury demand.”

The impact on asset prices overall remains to be seen, but moves so far indicate that a hit, at least in the short term, is to be expected.

There are massive uncertainties about a potential end to the conflict and when that would be, said Sokolova, however, also calling the market reaction “exaggerated” given the relatively small sales portion coming from the region.

Travel disruption

Strikes between the U.S., Israel and Iran in the region have forced airlines to cancel thousands of flights. While some airlines said Monday they would resume a “limited number” of flights, aircraft remain largely grounded as the conflict enters its fourth day.

The timing of the strikes also coincides with Ramadan, meaning that post-Ramadan travel may be disrupted if the conflict drags on. Travel from the Middle East after the month-long observance is predominantly to Europe, RBC said.

“Given the timing of the Iran War conflict, and the current grounding of commercial flights, there may be a reluctance for Middle East consumers to travel post Ramadan in 2026 which would likely negatively impact a portion of luxury consumption in Europe.”

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Business

Oil surges 35%, biggest weekly futures gain since 1983

U.S. crude oil on Friday posted its biggest weekly gain in futures trading history, as the escalating war in the Middle East has triggered a major disruption to global fuel supplies.

West Texas Intermediate futures surged 12.21%, or $9.89, to close at $90.90 per barrel. Global benchmark Brent rallied 8.52%, or $7.28, to settle at $92.69 per barrel.

U.S. crude soared 35.63% for the biggest weekly gain in the history of the futures contract dating back to 1983. Brent jumped about 28% for its biggest weekly gain since April 2020.

President Donald Trump on Friday demanded unconditional surrender from Iran, raising fears of a prolonged war that could wreak havoc on the global oil and gas market. The war has already brought traffic in the Strait of Hormuz, a critical shipping route for energy supplies, to a near standstill.

Qatar’s energy minister, Saad al-Kaabi, told The Financial Times on Friday that crude prices could reach $150 per barrel in the coming weeks if oil tankers were unable to pass through the Strait.

This could “bring down the economies of the world,” Kaabi said.

“Everybody that has not called for force majeure we expect will do so in the next few days that this continues,” Kaabi told the FT. “All exporters in the Gulf region will have to call force majeure. If they don’t, they are at some point going to pay the liability for that legally, and that’s their choice.”

The Trump administration on Friday announced a $20 billion insurance program for oil tankers in the Persian Gulf, though the measure did little to calm the crude market.

Iraq has shut down 1.5 million barrels per day of production, two Iraqi officials told Reuters Tuesday. Kuwait has also started cutting production after running out of storage space, people familiar with the matter told The Wall Street Journal on Friday.

“The market is shifting from pricing pure geopolitical risk to grappling with tangible operational disruption,” Natasha Kaneva, head of global commodities research at JPMorgan, told clients in a Friday note.

Production cuts could approach 6 million bpd by the end of next week if the Strait is not open to traffic, Kaneva said. JPMorgan expects the United Arab Emirates to show supply constraints next week.

The average price for a gallon of regular gasoline jumped nearly 27 cents in the last week through Thursday to $3.25, according to data from U.S. travel organization AAA

The war between Iran and the U.S. entered its seventh day on Friday. In a press conference on Thursday, U.S. Defense Secretary Pete Hegseth said the U.S. had “only just begun to fight.”

“Iran is hoping that we cannot sustain this, which is a really bad miscalculation,” he told reporters.

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Business

Private Credit Investors Rush to Withdraw

The rush for the exits in private credit is prompting fresh scrutiny of the sector’s less-liquid structures and its rapid expansion into the retail wealth space.

Blackstone has become the latest fund manager to be hit by a surge in requests from investors to withdraw from its flagship private credit strategy.

The asset manager said this week it will meet 100% of redemption requests in its gigantic $82 billion Blackstone Private Credit Fund, or BCRED, after investors sought to pull a record 7.9% of assets from the fund, or about $3.8 billion.

That came after Blue Owl Capital said last month it was ending regular quarterly liquidity payments in its Blue Owl Capital Corporation II fund, a semi-liquid private credit strategy aimed at U.S. retail investors. The private credit specialist will instead switch to periodic payouts funded by asset sales, earnings and other strategic deals.

This spike in redemption requests is now putting the private market industry’s courting of retail investors under closer scrutiny, and bringing the mismatch between non-publicly-traded, higher-yielding illiquid assets and retail-style access into sharper focus.

‘A feature, not a bug’

Blackstone — the world’s biggest alternative investment manager, with $1.27 trillion in assets under management — said it was upping a previously-announced tender offer to 7% of total shares, with the firm and employees offsetting the remaining 0.9%, in order to meet the redemption requests in full.

Blackstone Chief Operating Officer and President Jon Gray acknowledged that the risk of private credit firms failing to meet withdrawals, and potentially gating investors’ money, is “not beneficial in the near term” for the sector.

But speaking with CNBC’s “Squawk On The Street” Tuesday, Gray said individual investors and financial advisors “in most cases do” understand the product.

“What people sometimes fail to recognize is, they’re designed as semi-liquid products,” Gray said. “The idea that there are caps is really a feature, not a bug of these products. What you’re doing is trading away a bit of liquidity for higher returns. That’s the same trade-off institutional investors have made for a long period of time.”

Shares of publicly traded alternative asset managers — including Blackstone and Blue Owl, as well as KKR, Ares Management and Carlyle Group, among others — have dipped as concerns over multiple pressure points in the sector have spread.

These include late-cycle loan quality, AI-related risks in software portfolios, and fears of further individual blow-ups following the First Brands and Tricolor implosions last year.

Gray said that lowly-leveraged loans which produce a premium for investors are “a pretty good place to be,” adding that he expects they will continue to outperform liquid credit.

The BCRED fund has generated a 9.8% return since inception in its main share class, which indicates that, for now, the challenge remains one of liquidity rather than performance. Gray said there had been a “ton of noise” around private credit in recent weeks, adding, “it’s not a surprise that investors can get nervous.”

Moody’s Ratings warned that private credit’s tricky balance between delivering outsized returns while also offering retail-like liquidity will continue to be tested as the sector evolves towards the mainstream. In a recent commentary, Marc Pinto, global head of private credit at Moody’s, said funds may need to hold a larger proportion of more liquid, lower‑yielding assets to account for a growing retail presence — which could prove a drag on returns.

’180-degree switch’

Ultimately, the underlying assets will remain illiquid, regardless of the fund’s structuring, said William Barrett, managing partner at Reach Capital. “The retail market has to be conscious of that and not invest in these products the same way it would in an ETF,” Barrett told CNBC via email.

“Private markets inflows have been dominated by the institutional market for decades,” Barrett said. “It makes sense for our industry to now offer our products to retail but we should probably test it first with HNWI [high net worth individuals] and mass-affluent segments rather than making a 180-degree switch to mass retail.”

Barrett said the industry has to carefully select the right target markets for the right liquidity structures and the right underlying assets.

He noted that while there has been little sign of underperformance in the credit space at the portfolio level, “it makes sense that semi-liquid products feel the liquidity pressure first.”

Man Group, the London-listed global alternatives manager which has expanded its private credit activity in recent years,said private credit loans are originated with the “express purpose” of being held to maturity.

“This lack of tradability is a feature of the asset class, not a flaw,” said Andrew Weymann, director, client portfolio manager, U.S. private credit, and Zeshan Ashfaque, senior managing director and senior credit officer, U.S. direct lending, in a note Tuesday.

They said redemption pressure in private credit could also be influenced by another area of weakness: exposure to software-as-a-service companies. Blue Owl is a significant direct lender to the sector, which has been shaken by concerns that rapidly advancing AI tools could erode traditional SaaS business models.

“If retail inflows slow and outflows pick up, particularly for managers most exposed to AI risks or whose capital bases have a significant retail component, this will be an additional headwind for the industry to contend with,” Weymann and Ashfaque noted.

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