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Major consumer brands like L'Oreal, Adidas and Louis Vuitton are crashing, as brands that are heavily tied to China suffer on the yuan's decline.
China's central bank on Monday let the currency fall to an 11-year low against the dollar, in what many saw as retaliation for Trump increasing tariffs last week.
Global stock markets crashed on the news. The S&P 500 is down about 2.1%, following a plunge among indexes in Europe and Asia.
A falling yuan will lead to a big decline in the purchasing power of Chinese consumers, who, according to the Wall Street Journal, account for a third of luxury goods spending globally. In other words, Chinese tourists have less to spend abroad, and brands may have to decide whether to raise prices in mainland China.
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European companies that are heavily tied to China have suffered in the markets.
Kering, which owns Gucci, like LVMH has a big presence in China. In February, Kering's finance director said that its sales had been led by its China activity.
L'Oreal — -3.1%
L'Oreal has had a factory in Suzhou for the past 10 years, and with that looked to provide employment to those with disabilities in the area. According to the Financial Times, the head of L'Oreal last month said that its Chinese business was booming, saying "We've doubled the size of our business in China over the past four years, and the beauty market there is still very dynamic, especially the luxury segment,"
Anheuser-Busch InBev — -2.5%
AB InBev, the world's largest brewer last month scrapped plans to sell $9.8 billion worth of shares in its Asian business, in which was touted to be the world's biggest IPO. AB InBev had been looking to sell a minority sake in it's Budweiser APAC, which markets 50 brands including Budweiser and Stella Artois in China.
LVMH Moet Hennessy Louis Vuitton — -4.2%
Louis Vuitton had found China to be a haven of recent, as the popularity of luxury brands grows in the region. In 2018, China's luxury goods market grew for a second straight year of +20%.
Adidas — -4.2%
Adidas earlier this year unveiled a new Asia-Pacific and China headquarters in Shanghai and said it plans to open open 1,000 new retail outlets by the end of this year and gear up its digital growth momentum in the country.
