France has been mired in turmoil for months, as president Emmanuel Macron’s push to lift the pension age led to widespread protests . However oddly, the French inventory market has been climbing, thanks partly to high-end shoppers in China and a seemingly insatiable demand for all issues Cartier, Dior and Chanel. The iShares MSCI France ETF (EWQ) is nearing an all-time excessive, and Strategas Securities’ ETF and technical strategist Todd Sohn mentioned in a notice to purchasers that the fund is getting a lift from its massive share of luxurious items firms, which give traders a extra steady option to wager on China’s financial reopening after its Zero Covid slowdown. “There’s loopy volatility with Chinese language markets, as a result of they do not want 20-40% in any given yr. And so if I do not wish to cope with that, if I can not abdomen it, let me play a by-product of it, and France, in a method, is one of the best ways to do this,” Sohn informed CNBC. For instance, the largest holding in EWQ is LVMH Moet Hennessy — Louis Vuitton , which reported that 16% of its income got here from Asia ex-Japan in 2022 , down from 30% in 2019 , earlier than the pandemic. With China’s reopening gaining steam this yr, Paris-traded LVMH has jumped by 29%, making its chairman and CEO Bernard Arnault the world’s richest man . LVMH accounts for about 13% of the EWQ. Different massive luxurious holdings within the ETF embody cosmetics maker L’Oreal and ladies’s scarves and silk accent firm Hermes Worldwide . These shares have helped push up the EWQ greater than 14% this yr to ranges hardly ever seen in its historical past. The fund is threatening to high its all-time closing excessive, set again in November 2021, based on FactSet knowledge. That rally barely topped a earlier excessive from 2007. EWQ ALL mountain The iShares MSCI France ETF is buying and selling at near its all-time excessive. “You’ve got been, in a method, rangebound for 15 years now,” Sohn mentioned. To make certain, the outsized rallies for luxurious shares — and new highs for the fund — is also an indication {that a} reversal is close to, at the least within the short-term. Nevertheless, Roth MKM chief market technician JC O’Hara mentioned in a notice to purchasers on Sunday that it seems that luxurious shares nonetheless have room to run. “We first highlighted the energy of the Luxurious Items market in early December. Since that point, the S & P World Luxurious Items Index has risen +13%, versus the S & P 500, +1.8%. We proceed to favor the technical setup of lots of the luxurious good charts,” O’Hara wrote. Traders may definitely purchase a few of the particular person luxurious names on their very own. However from an ETF perspective, the EWQ — with an expense ratio of 0.53% — could be the neatest possibility for U.S. traders even when it isn’t a pure play, based on Sohn. What’s extra, not all French luxurious items shares commerce within the U.S. “If you wish to get publicity, the France nation ETF is one of the best ways, as a result of in any other case you are taking part in Europe regional ETFs or worldwide high quality ETFs, and so they’re extra watered down. There is no good thematic option to play these luxurious names,” Sohn mentioned. — CNBC’s Michael Bloom contributed to this report.
