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Burberry will no doubt be hoping that the week has brought some healthy profits, as the tills rang out to a large volume of Chinese shoppers descending not only on its Asian outlets but also its London stores. It’s normal for consumer spending to increase during China’s bank holidays.
However, there is less optimistic news from Asia in the form of the latest growth outlook posted by the World Bank. In April, this year’s annual growth for China, the Asian powerhouse, was estimated to be 8.3%, but this has now been downgraded to 7.5%. As a result, investors’ enthusiasm for the luxury goods retailer has eased in morning trading, and its price has dropped by almost 1.7%. This reaction is no great surprise, as the Asian market has been the driver for the company’s growth in the last decade.
The share price at these levels looks to have arrived at a bit of a crossroads. And the heavy weighting of institutional analysts who have a ‘hold’ rating for the company reflects the market’s general uncertainty about how well China will be able to regain its momentum from previous years.