Investors Ditch Flashy Brands for Understated Luxury Powerhouses

• Quiet Luxury Trend: Emerged as a significant social media fashion trend in the past year, emphasizing subtle and discreet displays of wealth.
• Investor Interest: Beyond its popularity on social media, quiet luxury has attracted investor attention, viewed as a trend with real returns and potential for inclusion in investment portfolios.
• DBS Bank's Top Picks: DBS Bank identifies businesses embodying quiet luxury, with top selections including brands like Hermes, Moncler, LVMH Moët Hennessy Louis Vuitton, Richemont, Swatch, Brunello Cucinelli, and Ermenegildo Zegna, signaling a shift in investor perspectives.

One of the most popular social media fashion trends of the previous year was quiet luxury. Unlike other fads that came and went on TikTok or Instagram, quiet luxury has proven real returns and found its way into investment portfolios.

"Quiet luxury"-what is it, then? Subtle, discreet displays of richness are central to the style, which has also been made more popular by hits like the HBO series "Succession."

Fashion used to be all about loud, ostentatious shows of riches, but nowadays it's all about subtlety and minimalism.

However, the trend is not just becoming more popular in the fashion industry; investors are also beginning to pay attention.

Some people have long believed that luxury stocks are a good way to protect against inflation. This is mostly due to the segment's strong margins compared to many other consumer discretionary items, such as phones or televisions, and its premium cost, which seldom deters its wealthy client base.

Fundamentally speaking, the segment's characteristics haven't altered all that much over the years, but as the quiet luxury trend gains traction, investors are beginning to select companies that mostly fit those criteria.

According to analysts, certain firms and their labels perfectly capture the spirit of quiet luxury. Data from DBS Bank, the largest lender in Southeast Asia, indicates that certain brands have been able to beat their "loud" competitors in 2023.

DBS's Top Picks and the Evolving Dynamics in Asia-Pacific

DBS claims that a business may be classified as "quiet luxury" if it is modest, prioritizes good quality, and retains exclusivity and rarity.

Hermes, Moncler, LVMH Moët Hennessy Louis Vuitton, Richemont, Swatch, Brunello Cucinelli, and Ermenegildo Zegna are a few of the bank's top selections.

Investors are viewing these firms with a far longer term view than transient viral movements.

The story of luxury goods demand in Asia-Pacific may be changing as a result of China's uneven recovery from the epidemic and weak domestic demand.

While the demand for luxury products among Chinese customers may not have entirely diminished, luxury businesses are expanding their reach to include other significant Asian regions.

According to Hansen, there is an increasing demand for luxury products in developed Asian economies such as South Korea and Japan.

About 100 million Indians are expected to become "affluent" by 2027, according to a recent Goldman Sachs analysis. The American investment firm defined "affluent" as having an annual income of more than $10,000. According to the survey, 60 million people in the fifth-largest economy in the world currently make more than $10,000 annually.