China's brandy duties depress shares of makers of spirits, luxury and cars

Reuters

China's brandy duties depress shares of makers of spirits, luxury and cars

2024 10월 8 일, 오전 8:11 GMT

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Recasts with more sectors impacted, updates shares, adds comments on cars sector

By Leo Marchandon and Ozan Ergenay

Oct 8 (Reuters) -China's provisional anti-dumping duties on brandy imports from the European Union (EU) depressed spirit makers' shares on Tuesday with knock-on effects for luxury and auto brands as concern grew Beijing could extend its trade measures.

After the EU said it was pressing ahead with tariffs on Chinese-made Electric Vehicles (EVs) following a split vote on Friday, Beijing on Tuesday said importers of relevant brandies originating in the EU would have to provide a security deposit to Chinese customs.

Pernod Ricard PERP.PA shares fell 3.8%, while those of Remy Cointreau RCOP.PA lost 8.2% by 0951 GMT, on track for their worst single-day drops in 11 and 10 months respectively. The losses have so far wiped roughly a combined 1.6 billion euros ($1.76 billion) off their market values.

Jefferies analysts estimated in a note to clients that the tariffs could translate into a 20% consumer price increase, which would probably turn into a 20% decline in volume and supplier sales.

They added Pernod Ricard's portfolio and distribution network meant it was better placed to navigate the environment than peers.

Neither company was immediately available to comment.

Luxury names, for whom China is one of the main export regions, including LVMH LVMH.PA, which also markets high-end Hennessy cognac, Hermes HRMS.PA, Kering PRTP.PA, Ferragamo SFER.MI and Burberry BRBY.L, dropped 2%-6%.

The negative sentiment was exacerbated by falls on the Chinese stock market as a rally driven by economic stimulus was reversed after officials refrained from stronger fiscal steps that investors had hoped for.

German car makers, which could be hit the hardest by retaliatory moves from china, also sank.

Volkswagen VOWG.DE, Porsche AG P911_p.DE, Mercedes-Benz MBGn.DE, BMW BMWG.DE, and Porsche Automobil Holding PSHG_p.DE were down between 1.5% and 3% at 0920 GMT.

"It's not coming as a major surprise", Stifel Europe analyst Daniel Schwarz said. "But the negotiations are supposed to go on in the coming weeks. I think there was hope that there's still a solution negotiated between China and Europe," he added.

Car parts suppliers Forvia FRVIA.PA and Valeo VLOF.PA also fell 3.6% and 1.7% respectively.

($1 = 0.9101 euros)

Reporting by Leo Marchandon and Ozan Ergenay; Additional reporting by Giancarlo Navach; Editing by Mark Potter and Barbara Lewis

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