The so what

For two years, the working thesis on Asian luxury was simple: China spending is broken, and every brand with mainland exposure gets punished together. That thesis just broke. On July 15, Richemont posted first-quarter sales of 6.33 billion euros for the period ended June 30, up 20% at constant exchange rates and comfortably ahead of the roughly 5.90 billion euros analysts had modeled 1 3. Asia Pacific sales rose 21%, with China, Hong Kong and Macau combined posting double-digit growth and South Korea and Taiwan also strong 1. The stock jumped as much as 7.4% intraday to a record before closing up nearly 7% at 195.60 Swiss francs, and the relief spread across the sector, with Hermes, Kering and LVMH shares climbing 2.4% to 2.9% in sympathy 3 2. For investors, the signal is not that China demand has healed. It is that the market is now pricing Asian luxury by product category and price tier rather than treating the region as one undifferentiated risk.

Why jewellery is winning the China trade

Richemont's Jewellery Maisons, primarily Cartier and Van Cleef & Arpels, generated 4.73 billion euros of revenue, up 24% year on year and the seventh consecutive quarter of double-digit growth for that division 3. Retail-channel sales, as opposed to lower-margin wholesale, rose 24% across the group 1. Jefferies called the numbers a blow-out and argued the rest of the July reporting season will confirm jewellery as a disproportionate winner in current conditions 3. The logic investors are now underwriting: hard jewellery functions partly as a store of value and a hedge against a weaker renminbi and volatile mainland property and equity markets, so wealthy Chinese buyers keep spending on it even while trimming discretionary handbag and ready-to-wear purchases. That distinction between investment-grade luxury and fashion-cycle luxury is becoming the new dividing line analysts use to sort winners from laggards across the region.

LVMH and Hermes are playing a different game

Contrast that with LVMH, whose leather goods and fashion houses carry more cyclical, trend-dependent demand. LVMH's April 13 first-quarter report showed Asia excluding Japan actually delivering a solid 7% organic growth, led by China and North Asia, extending a recovery that began in the second half of 2025 6. But the group's headline results still missed consensus and rattled investors, as the Israel-Iran conflict curbed European tourist spending and currency swings hit reported revenue, muddying the read-through on China specifically 6. Hermes tells a similar story of a two-speed China. Jefferies' June note flagged first-quarter organic growth of 5.6%, a positive surprise overall, but Asia-Pacific excluding Japan grew just 2.2%, against a 5.7% consensus estimate and a sharp step-down from 8% growth as recently as the fourth quarter of 2025 7. The brokerage trimmed its price target to 2,000 euros from 2,400 while keeping a Buy rating, citing softer Middle East travel spending and sluggish Chinese wholesale demand, even as it flagged tentative recovery signs: recovering quota-bag order flow, rising Birkin resale premiums, and a roughly 50% year-on-year jump in Google search interest in the brand during the second quarter 7. Hermes reports its own second-quarter numbers on July 29, and Jefferies expects that print to be the next test of whether the China recovery is broadening beyond jewellery 7.

The analyst repricing already underway

The sell-side reaction to Richemont's print was immediate and directional. JPMorgan raised its price target to 220 Swiss francs from 200 and kept an Overweight rating, with analyst Chiara Battistini describing the results as extraordinarily good 4. UBS maintained its Buy rating with a 182-franc target 5. Across the broader analyst base, the consensus on Richemont now sits firmly at Buy, with the majority of covering analysts recommending purchase and none recommending sale, a striking contrast to the more cautious, wait-and-see language attached to LVMH's leather goods division and Hermes' near-term China wholesale trends 5. That is the sentiment shift investors should track: the same reporting season is producing upgrades for hard-luxury names and more measured, show-me commentary for fashion-led peers, even though all three are selling into the same Chinese consumer.

What it means for investors

The macro backdrop still supports caution rather than blanket optimism. Bain estimated China's personal luxury goods market contracted 3% to 5% in 2025, a moderation from the steeper 2024 decline, with recovery signs emerging as favorable base effects, a stronger domestic stock market and improving consumer sentiment took hold later in the year 8. Bain also flagged a structural shift worth pricing in: roughly 65% of Chinese luxury spending now happens inside the mainland rather than on overseas trips, and homegrown Chinese luxury players, particularly in beauty, are taking share from Western brands through digital-first strategies and sharper pricing 8. For portfolio positioning, the read is that Asia-exposed luxury is no longer a single trade. Jewellery and hard-luxury names with genuine investment-value appeal are being rewarded and upgraded, while leather-goods and fashion houses more dependent on discretionary, trend-driven spending face a longer, choppier grind back to consistent Chinese growth, and that divergence in analyst targets and ratings is likely to widen further through the rest of this earnings season.