Yahoo Finance’s Ines Ferré discusses $5 billion in outflows moving from U.S. equities to European and emerging markets and into luxury stocks, in particular.

Video Transcript

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RACHELLE AKUFFO: All right, well, we're starting this hour with our eye on equities, as 2023 shows a reversal in trends among investors who are now turning to non-US assets. That's according to Goldman Sachs. We have Yahoo Finance's Ines Ferré here with the details. And where investors are actually shifting regions that might want to keep an eye on. So Ines, what are we watching?

INES FERRÉ: Yeah, Rachelle, well, Goldman Sachs analysts have been taking a look at outflows over the last several weeks. And in the first two weeks of January, they saw some $5 billion in outflows into stock funds in Europe-- into Europe, into China, and other emerging markets. And that's because of a weaker dollar. It's also because of commodity prices that have been falling so that's bullish for Europe, for example. And then over, of course, the optimism over the re-opening of China.

And so for a while, investors were only looking at US assets and investing in US equities. But now, investors are looking abroad. The Fed is expected to continue increasing rates, somewhat. And so that is expected to have impact, for example, on tech stocks and the S&P 500.

And capital really flows to where it's treated best. So as China is re-opening, this is very bullish for companies which service China, which sell to China, where the demand is high in China. And that includes the luxury brands.

So you had Burberry that just reported its quarterly results. Last quarter, the demand was muted in China because of those lockdowns. But Burberry's CFO is already talking about seeing a change in traffic patterns. That means that the Chinese consumers are traveling to places like Macau, to Hong Kong to buy luxury goods. Also Richemont, that's the owner of Cartier, said that also sales are starting to pick up.

And just another note, LVMH, the owner of Louis Vuitton, that stock in Europe today is hitting record highs. I want to show you what's happening with the luxury intraday chart here that you can see on our YFi Interactive Board. And it has been outperforming the broader markets.

I'm gonna pull up a year-to-date chart so you can see the gains in these luxury brands year-to-date. And I'm gonna pull up a one-year chart so you can see that compared to the broader markets, have been-- these stocks have been outperforming for the most part.

RACHELLE AKUFFO: It's always an interesting sector to keep an eye on to see why luxury is so resilient. Ines Ferré there for us.