LONDON — China’s repeated devaluation of the yuan this week was a further blow to luxury groups that were already suffering the effects of a slowdown in domestic demand in the region and ongoing political issues in the high-margin markets of Hong Kong and Macau, according to analysts.

Many retail and luxury firms with exposure to the region saw shares plummet 5 to 10 percent in the wake of China’s move.

It now remains to be seen how Chinese customers, who represent about 30 percent of the spend in the luxury sector, will react to a less powerful yuan, and how the weaker currency will impact the consumption of luxury goods in Mainland China.

On Thursday Luca Solca, managing partner at Exane BNP Paribas, said in a report that the impact of China’s move depends on some major variables, including the eventual extent of the devaluation; companies’ exposure — in terms of sales — to Mainland China; luxury customers’ response to brands’ pricing in the region, and whether the Chinese will start spending again locally, rather than abroad.

He believes that while the devaluation is “a net negative for most luxury players,” the share price moves on the back of it seem “overdone.”

“When fully factored in, moderate [yuan] devaluation has a very low-single digit negative impact on luxury players’ profits,” he wrote, adding that not having made price cuts in China is a net plus. “At first sight, LVMH (Moët Hennessy Louis Vuitton) and Swatch look better off. By contrast, companies that have cut prices, like Burberry and [Compagnie Financière Richemont], have a higher hurdle to clear.”

Mario Ortelli, senior analyst at Bernstein Research, and his team wrote in a separate report that the devaluation of the Chinese currency will likely have “a predominantly negative impact” on luxury companies’ businesses.

He said the weaker Chinese currency will dampen the foreign exchange benefit on the reported numbers of luxury goods companies and discourage international tourism by Chinese nationals, who are avid buyers of luxury goods when traveling abroad.

“We estimate that (about) 75 percent of luxury goods spending of the Chinese is conducted outside of Mainland China. The currency move could also affect consumer confidence and could foster a more cautious attitude in Chinese consumers with regards to discretionary purchases,” the Bernstein report said.

On the positive side, Ortelli added that, going forward, more luxury items might well be purchased in China, traditionally a high-margin market for luxury goods; price differentials between Europe and Asia will narrow, reducing gray market risk; and the pressure on luxury goods players to re-adjust prices to compensate for extreme swings in currency will ebb.

The report added that “quality is absolutely paramount for successfully navigating this and further potential changes in the market.” It said that LVMH and Hermès will face the least margin pressure, or have the greatest margin benefit, if purchases of the Chinese consumer repatriate to Mainland China, given they did not make price cuts in the region.

It said Hermès, LVMH and Richemont are best positioned to manage the ongoing changes impacting the Chinese luxury market. “This is due to their strong brand positioning with regard to the Chinese consumer, pricing power and ability to maintain margin whether purchases occur in Mainland China or in other regions.”

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