BUZZ-Luxury: valuations demanding - Credit Suisse

** Credit Suisse (IOB: 0QP5.IL - news) downgrades the luxury sector to "benchmark" from "overweight" as both revenue and earnings expectations have now normalised, offering little scope for further upgrades

** Broker flags 12-month forward P/E and P/B relative are currently elevated, at 1.8 and 2.0 standard deviations above their respective historical averages

** CS says that, even though the sector's performance has disconnected from the euro in recent months, further euro strength, historically a headwind, may be problematic

** The sector seems to have already priced in the recovery of China-related luxury demand as luxury stocks have overshot the rally in Macau casino stocks, per broker

** CS highlights that lead indicators of house prices, Chinese M2 growth and KOF watch export data imply a slowdown in luxury spending

** CS says pace of China's anti-corruption campaign has slowed to a three-year low (but might be replaced by a 'deleveraging campaign')

** A loss of policy momentum in U.S. President Donald Trump's tax reforms (which could boost the after-tax income of the top 1% by nearly 15%) is problematic, per broker, as the U.S. accounts for 15% of the sector's demand