Hermes to join Euro Stoxx 50 on Dec 20

PARIS: Hermes International is set to join one of Europe’s main equity benchmarks, an inclusion that will further bolster the French luxury company’s visibility among investors.

Hermes, the maker of Kelly and Birkin handbags will replace Universal Music Group N.V. in the Euro Stoxx 50, index operator Qontigo said in a statement late on Wednesday. The change will be effective as of Dec 20.

The inclusion is further evidence of the big-brand status of Hermes, which wasn’t even a member of France’s benchmark CAC 40 Index until June 2018.

Like peer LVMH, which owns Louis Vuitton and Dior, the company has been benefiting from a boom in luxury demand that accentuated during the coronavirus pandemic.

“Hermes represents quality,” says Cedric Ozazman, chief investment officer at Reyl & Cie.

“It has one of the highest earnings before interest and taxes margins in the discretionary universe and it’s able to resist in recessions while generating strong and recurrent top-line growth in boom phases,” he added.

Hermes shares have rallied 90% so far this year as of Wednesday’s close, giving the company a market value of €176bil (US$199bil or RM839.8bil)).

The company’s style is considered more discreet than that of rivals such as Kering SA’s Gucci, and Hermes tends to be more stable than its luxury competitors.

Leather-goods production is kept under tight control, meaning long waiting lists for its iconic handbags in spite of their US$10,000-plus (RM42,200-plus) price tag.

Hermes is “steady as a rock,” Alphavalue analyst Jie Zhang wrote in a note last month.

A “classic collection” and long waiting lists will not only add to the brand’s “magnetism but also make Hermes more resilient to external factors.” Inclusion in widely followed indexes is becoming more important for companies in a world increasingly dominated by passive investment funds.

An estimated 27 exchange traded funds with €35bil (US$39.6bil or RM167bil) in assets follow the Euro Stoxx 50 benchmark, according to data compiled by Bloomberg Intelligence. Qontigo also announced changes in the Stoxx 600 benchmark. — Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights


Next In Business News

Sasbadi slips into the red
Pintaras secures RM34.3mil contract
Censof appoints Vicks Kanagasingam as CEO of Censof Digital
KLCI sinks 12.95 points amid regional sea of red
Asian shares extend losses on Ukraine fears and Fed jitters
In surprise move, Singapore tightens monetary policy on inflation risks
Touch 'N Go to launch new version of card with NFC capability
Oil prices rebound as growing geopolitical tensions fuel supply fears
Gold muted as Fed caution counters Ukraine risks
Leading index rises to 111.3pts in Nov 2021 signalling positive economic recovery

Others Also Read