Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

Nisha Gopalan is a Bloomberg Gadfly columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

To celebrate the Year of the Monkey, users of Chinese social network WeChat will be able to open sparkling virtual Burberry gifts and send personalized Burberry messages.

Lunar New Year is always a crucial time for luxury. But there's even more reason to hope that in shopping terms at least, this year's celebrations go with a swing.

The holiday will be a litmus test for demand from a consumer base that accounts for about 30 percent of global luxury spending, according to Bain's estimates, or about 40 percent of retail sales in the case of Burberry.

Anti-extravagance measures and the waning popularity of Hong Kong, thanks in part to the territory's strengthening currency (which is pegged to the U.S. dollar), have taken their toll on demand for everything from Jaeger-LeCoultre watches to cognac.

But so far this year, and despite talk of a China crisis, luxury groups have begun to -- tentatively at least -- paint a brighter picture. Because there are still plenty of wealthy consumers. As my colleague Chris Bryant noted, Chinese buyers bought 500 high-end Mercedes Maybachs every month in the past year.

Sales in the mainland are rising. There's an appetite for everything from Burberry rucksacks -- a particular favorite among Chinese shoppers last autumn -- to Cartier bangles. Louis Vuitton handbags, Swatch watches and Tod's loafers are also getting snapped up. 

What can explain this free spending amid turmoil? After the terrorist attacks on Paris, some Chinese may have postponed trips to Europe, opting instead to spend at home. And the government's crackdown on corruption has had an unexpected side effect -- instead of spending money on gifts for officials, consumers are spending it on themselves. Luxury always wins against financial turmoil. Throughout much of the global recession, luxury has shown surprising strength.

Luca Solca, analyst at Exane BNP Paribas, forecasts that the Chinese will spend marginally more at home this year, but less abroad. The difference all comes out in the wash from the standpoint of luxury sales, and he says global growth could be about the same as in 2015.

It seems investors haven't got the memo about the hidden strength of Chinese luxury spending. Valuations have taken a tumble as sentiment about China has lurched downwards. The Bloomberg Intelligence global luxury peer group is trading at about 15 times the next 12 months' earnings, close to the MSCI World Index. In the past, luxury goods groups tended to trade at a premium.

And so far this year, the Bloomberg Intelligence global luxury peer group is down 4 percent in dollar terms, although that is outperforming the MSCI World Index. It's a shift from last year's massive underperformance, and maybe there's room for luxury to pull ahead even more. 

High-end retailers have another trick up their bell-shaped sleeves. They can adjust their spending to where the Chinese shoppers are, and that increasingly may be Japan.

Depreciating Yuan
The currency's depreciation may hurt sales of luxury goods in Japan
Source: Bloomberg data

A favorable exchange rate has already made the island a favorite destination for Chinese travelers, and that dynamic might improve with the Bank of Japan's move into negative interest rates. As the chart below shows, visitor numbers from the mainland accelerated as the yuan strengthened against the yen.

Chinese Tourists
Monthly growth in Chinese tourists to Japan
Source: Japan National Tourism Organization

Retailers with a strong Japanese presence stand to benefit. Coach, Tiffany, Hermes, Kering and Prada had the biggest proportion of sales from Japan in 2014, according to Bloomberg Intelligence.

Burberry, which gets just 2 per cent of its revenue from Japan, is the one that might be left out in the cold. The British luxury goods group is taking greater control of and expanding its business there, but for now it's behind the pack. Digital gimmicks may not be enough to boost this monkey business.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the authors of this story:
Andrea Felsted in London at
Nisha Gopalan in Hong Kong at

To contact the editor responsible for this story:
Jennifer Ryan at