LVMH is shifting resources out of Hong Kong, reflecting waning interest in what used to be Asia’s premium shopping hub as mainland Chinese consumers switch to shopping at home.

The top global luxury conglomerate wants to focus more of its investment in burgeoning metropolises such as Shanghai, Chengdu, Guangzhou and Shenzhen as Hong Kong loses its relevance in the Greater China region, according to people familiar with the matter, who asked not to be identified discussing private deliberations. 

To that end, it’s already moved the regional headquarters of some brands, including the group’s local head office, to Shanghai, and relocated some senior executives to the mainland, the people said.

Eoin Treacy's view

The question Hong Kong has to answer is why? The gateway to China rationale is wearing thin as the mainland deals easily with most of its counterparties and expertise is migrating to other cities. The fear of Hong Kong becoming “just” another Chinese city was at the centre of concern about the security law a couple of years ago and the reality is now coming to fruition. Greater geopolitical tension between China and the developed world is not good news for Hong Kong exceptionalism.

The Hang Seng Index is barely steady as it attempts to hold in the region of the 200-day MA.

There is clear potential that at some point in future, the city state’s US Dollar peg will be incompatible with central government policy and will be ended.