Tesla boss Musk has just “temporarily lost” the throne of the world’s richest man, and was crowned by Bernard Arnault, chief executive of luxury brand LVMH. This is related to Musk’s “self-reliance”, causing too many controversies and affecting Tesla’s stock price; at the same time, LVMH’s stock price is very “competitive”, and it has surged 30% against the market in the past half a year, reflecting that the top luxury goods market has not been affected by the epidemic and inflation. , recession and other problems. McKinsey (McKinsey) released a survey report yesterday and found that China’s low-income grassroots have significantly cut spending this year, while high-income groups have spent more generously, which just highlights the polarized impact of the economic crisis on different classes.
According to the Forbes real-time rich list, in the early hours of Thursday morning local time, the ranking of the world’s richest people “transiently shifted”, because Tesla’s stock price once fell by nearly 4% on that day, while LVMH rose slightly. Although Tesla’s decline in the late market narrowed (down 3.2% throughout the day), Musk once again regained the title of the richest man. However, at the beginning of this year, his net worth was more than twice that of Arnault, but the other party changed from not being able to see the taillights of the car to chasing after the horse’s head. What has happened these past few months?
Musk’s net worth shrinks Arnault ahead
On the one hand, technology stocks are generally “not operating” this year, from Apple, Amazon to Meta, and Tesla is no exception. At the same time, Musk’s $44 billion acquisition of Twitter has caused a lot of controversy, and Tesla shareholders are also dissatisfied with his “distraction”, which will inevitably affect the stock price of the car company. Since its peak in March this year, Tesla’s stock price has fallen by more than 50%, and Musk’s net worth has naturally shrunk.
On the contrary, LVMH’s stock price trend is very sharp, and it has risen nearly 30% since March this year. The 73-year-old Arnault is the king of luxury goods in Europe. In 1987, he took advantage of the stock market crash to win the controlling stake in LVMH, and then single-handedly promoted the group’s four mergers and acquisitions to expand and establish a famous brand empire. He holds about 51% of LVMH’s shares, and his net worth has risen, reaching US$185.5 billion (about HK$1.44 trillion) as of Thursday.
LVMH owns LV, Tiffany, BVLGARI, Christian Dior, Givenchy, Moët & Chandon and other brands. These luxury brands have recently announced that most of their sales have recorded considerable growth, driving the group’s turnover in the first three quarters of this year to increase by 28% year-on-year. Fast outperformed many technology stocks, making LVMH’s stock price “beautiful” this year.
Many people will wonder why the global economy has been plagued by epidemics, wars, inflation, and recession in recent years. Why is LVMH’s performance not only unaffected, but getting stronger? It just so happened that McKinsey announced the latest survey results of China’s consumer trends yesterday, from which we can see some clues.
McKinsey concluded after interviewing more than 6,700 Chinese consumers: “The rich in China will continue to increase consumption this year, while the poor will cut spending even more.” For example, among groups with an annual income of more than 345,000 yuan, more than A quarter (26%) of respondents have increased spending by more than 5% this year compared to last year; meanwhile, only 14% have cut spending this year. On the other hand, only 12% of those with an annual income of less than RMB 85,000 will spend more this year, while as many as 27% will “stretch their pants”.
The above-mentioned trend brings up an economic question. Did the crises of inflation and recession in recent years hit the “rich” or the “poor” harder? On the surface, the wealth of the rich suffers more because most of them hold assets such as stocks, real estate, and cryptocurrencies. As asset prices decline, personal wealth will inevitably “beat dogs with water.” On the contrary, the poor “have nothing to live on”, no shares, no buildings, no Bitcoin, and their property is unstoppable, and they can outperform the rich by “lying flat”.
But in fact, from the perspective of quality of life, even if a wealthy person’s net worth shrinks from 10 billion yuan to 7 billion yuan, it is a digital change, and the impact on his consumption choices is limited. “I switched to drinking second- and third-tier goods by myself. Furthermore, as the economist Thomas Piketty pointed out, the wealth of the rich is more suitable to be measured from the perspective of “real things”. For example, a rich man originally owns 10 billion yuan and can afford to buy 200 luxury residential units in Bel-Air (assuming that each unit is 50 million yuan) ;His net worth has now shrunk to 7 billion yuan, but the property price of Bel-Air luxury houses has fallen by half from the high level, and 280 units can be bought. Is his wealth increasing or decreasing?
On the other hand, although the poor have no assets, theoretically there is no problem of depreciation, but if the income is reduced due to the epidemic or economic recession, and the purchasing power is eroded by inflation, it will directly affect the quality of life. For example, a grassroots citizen with an income of 10,000 yuan a month is already struggling. When the epidemic is underutilized and his income is reduced to 8,000 yuan, while food prices rise by 20%, he may even have problems eating three meals.
From this point of view, a rich man’s book value has shrunk by 30% in recent years, while the poor man has not changed. If you don’t change your face, who will lose and who will win?
Commonly wealthy people in China may lie flat
In addition, according to people in the luxury goods industry in Hong Kong and the Mainland, the business of the industry has been booming against the market in recent years. One of the reasons is that many wealthy people are restricted by epidemic prevention and cannot travel freely. Kaiseki cuisine, deeply depressed; fortunately, the high-end shopping malls in the city where they live continue to operate, and “scanning famous brands” has become one of their outlets. Save money on air tickets, hotels, and three-star restaurants, and spend more “spare cash” on shopping. No wonder the luxury business benefits instead.
The disparity between the rich and the poor is one of the most pressing problems in the global society. After the crisis of the epidemic, inflation and recession in the past few years, the real gap measured by purchasing power seems to have increased unabated. It can be said that “the rich get richer, and the poor lose their pants.” It is no wonder that Thomas Piketty wrote a book and clarified that it is necessary to adopt radical measures (such as up to 80% progressive wealth tax, UBI universal basic income, etc.) to reverse the situation, while the Chinese government is pushing for “common prosperity”; but these policies may weaken The people’s enthusiasm for creating wealth and the driving force of economic growth are so great that the gains outweigh the losses, which is a dilemma.
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