The billionaire behind French luxury giant LVMH, Bernard Arnaut, saw his wealth skyrocket by $17 billion in just one day, following China’s announcement of new economic stimulus measures aimed at boosting growth. Some are calling these the much-anticipated “bazookas” needed to restore confidence in the economy.
Arnaut wasn’t the only beneficiary. According to Reuters, Chinese and Hong Kong stocks are on track for their best weekly performance in 16 years, thanks to the surprise stimulus and bold statements from Chinese leaders.
At the start of Thursday, Arnaut had lost more wealth than any other Billionaire this year, with his fortune down by $24 billion due to a slowdown in the luxury market, based on data from the Bloomberg Billionaires Index.
However, by the end of the day, his net worth surged by $17 billion, reaching $201 billion. Bloomberg described it as Arnault’s third-largest single-day gain ever. This spike came after LVMH shares jumped nearly 10% in Paris, fueled by optimism that China’s leadership would succeed in revitalizing the economy—potentially reigniting demand for luxury goods.
LVMH had previously reported a 10% drop in sales for the first half of the year in its Asia market, which includes China and accounts for 31% of the company’s revenue.
China’s struggling economy has been taking a toll on many Western brands, as the country faces a host of challenges. Sluggish consumer spending, a prolonged property slump, and a growing local government debt crisis have all contributed to the downturn.
For months, economists have been urging Chinese officials to take stronger action to boost the world’s second-largest economy, which had been at risk of falling short of its 5% growth target. This week, it seems those calls are finally being answered.
“Beijing appears determined to roll out its stimulus ‘bazooka’ in quick succession,” analysts at Nomura wrote in a Thursday research note. They added that markets should appreciate China’s acknowledgment of the economy’s dire state and the ineffectiveness of previous, more cautious efforts.
The markets are already responding. As of Friday, Chinese and Hong Kong stocks are poised to have their best week since 2008. Hong Kong’s Hang Seng index is up more than 12% for the week, while mainland China’s blue-chip CSI300 has surged over 15%.
Markets surged after investors welcomed Thursday’s news that China’s 24-member Politburo, the country’s top decision-making body, had devoted its September meeting entirely to economic issues—breaking from previous norms.
Led by President Xi Jinping, the Politburo pledged to ramp up “counter-cyclical fiscal and monetary policies,” with a focus on helping low- and middle-income citizens and revitalizing the struggling property market, now in its fourth year of decline.
This announcement followed measures introduced two days earlier by Pan Gongsheng, the governor of the People’s Bank of China (PBOC). He unveiled a series of steps aimed at boosting business activity, including cutting a key interest rate and lowering the amount of cash banks are required to hold in reserve, freeing up funds for lending.
The PBOC reduced the seven-day reverse repo rate from 1.7% to 1.5% and slashed the reserve requirement ratio for banks by half a percentage point, releasing around 1 trillion yuan ($142 billion) for new loans.
Pan also announced cuts to existing mortgage rates and lowered the minimum down payment for second-time homebuyers from 25% to 15%, in a bid to support the faltering property sector—widely seen as the root of China’s economic troubles.
Despite these bold moves, experts advised investors to remain cautious. Stabilizing the property market, which once accounted for up to 30% of China’s economic activity, remains a challenge. The sector began slowing in 2019 and plunged deeper two years later after government crackdowns on developer borrowing.
