What are you planning to gift yourself this Christmas? Handbags from Hermès, Tiffany diamonds and a Cartier watch? You might think it is too extravagant for these austere times. But you will be surprised to know that many of the luxury brands like Burberry, Ralph Lauren and Richemont have all announced healthy profits – proving that for the luxury goods sector at least, the recession is over.
It would not be a bad idea to own a small part of these companies instead of lusting after their goods. The companies who have not limited themselves to the developed markets but have tapped into the emerging markets story and moved into China, Russia and India are reaping the benefits. The world economy is bigger than it was before the recession forced a dip for a year.
The large population of China and India and the double digit growth of their economies means very large disposable incomes in the hands of a very large middle class who seek the trappings of a wealthy Western lifestyle. The luxury brands that establish themselves in these markets can register healthy growth in the coming decade or two. It makes sense to invest in these companies and pick up their stocks.