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Global luxury stocks have surged in the first-half of the year, driven higher by investor optimism over company earnings as well as rising demand from consumers in emerging markets.
However, growing concerns over a further slowdown in global growth, particularly in the world's second-largest consumer of luxury products China, is putting into question whether the gains can be sustained.
Italian Fashion house Prada, listed in Hong Kong, has seen its stock surge 45 percent year-to-date, while Michael Kors' NYSE-listed shares have risen over 50 percent this year.
Eddie Tam, who runs the Asia-focused hedge fund Central Asset Investments, tells CNBC that there is not much upside left for the stocks, given their demanding valuations and worries over the state of the global economy.
“We are starting to go short some of the global luxury retail plays – most of them are U.S. or Europe based,” Tam said.
The China Factor
Tam, who is based in Hong Kong – a popular destination for Chinese shoppers – says he is seeing signs of a slowdown in luxury spending.
“High-end shopping districts such as Ocean Terminal (in Hong Kong) are seeing slower footfalls, compared to a year earlier,” he said.
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