A number of factors, not least the current market volatility, mean that now could be an opportune time to invest in luxury stocks, argues Scilla Huang Sun, fund manager of the JB Luxury Brands Fund atSwiss & Global Asset Management.

The prevailing volatility is not down to fundamentals but rather panic and this is causing investors to take profits from luxury stocks which have performed well, notes Huang Sun. However, in contrast to the gloomy economic picture in the US and Europe, Asia is less burdened with debt issues and is showing better economic growth - buoying demand for luxury products. The fact that the majority of luxury goods demand is coming from Asia is highly supportive of growth; add to that that valuations are currently looking cheap, and a buying opportunity may be afoot.

Huang Sun points out that generally luxury firms have had a solid first half of the year, with demand remaining robust. Investors should pay little heed to the short-term volatility in the markets as the growing wealth and consumption in emerging countries is one of the big themes that will continue over the coming years, she explains.

Huang Sun concedes that companies’ comments have been somewhat more cautious recently, but she believes that this is due to the world economy and financial markets being highly volatile, rather than a lack of confidence in their business models. It is simply difficult to make forecasts accurately amid such increased uncertainly, she says.

“If we can avoid a double dip recession, I believe it is a good time to start dipping your toes into the ‘cold’ water. It is difficult to call when the bottom of the market will hit and it’s best to invest in several steps as markets will remain volatile, depending on newsflow like macro numbers, political announcements etc. It is tough to predict and time markets, and when people panic, anything can happen,” says Huang Sun.