Neither The Exchange Rate Nor The Luxury Market Is Very Calm.

The Swiss central bank unexpectedly announced that it would decouple from the euro and abandon the lower exchange rate of the euro against Swiss Franc 1:1.20, which resulted in a sharp rise of 30% in the Swiss franc against the euro and an increase of over 15% in all currencies around the world.

On the day of the announcement of the Swiss central bank, the price of the group fell 16%, the largest single day decline in 20 years.

The stock price fell 21.4% in the following week.

Analysts have cut the target price and earnings expectations of these two stocks. JP Morgan has sharply lowered the target price by 16% to 80 Swiss francs.

Nick Hayek, chief executive of Swatch group, told Bloomberg that "the action taken by the SNB today is a great tsunami for the export industry, tourism industry and the whole country".

A substantial appreciation of the Swiss Franc means buying Switzerland.

Consumers in other countries should pay a higher price. This will be a difficult task for Swiss luxury goods group, which always advertised "made in Switzerland" to show high quality.

European fund manager, Royal London Asset Management Co

To reduce exchange rate risk, companies need to change their cost structure and spread costs around the world, but for Swatch group, it will lose its unique selling point ("made in Switzerland").

In January 22nd, when the European Central Bank launched the European version of quantitative easing (QE) as expected, the euro's exchange rate dropped to 7 against the yuan, and also led luxury brands to "raise prices".

Although the tsunami is amazing, it is only the second major blow to the luxury giant in recent years.

After the slowdown began in 2013, the group's 2014 financial statements were "not very beautiful".

In the first half of the year, Louis, the world's largest luxury magnate, earned 14 billion euros, up 3% over the same period last year. The US maintained a growth momentum and the European market remained stable. But in China, the demand began to weaken in the second quarter of the year.

The second largest luxury group, the third quarter of 2014, sold 3 billion 51 million euros, while the Asia Pacific market contributed only 1 billion 70 million euros, a 12% decline compared with the fixed exchange rate.

The French Open Cloud group sold 8 billion 30 million euros in the first three quarters of 2014, but its core brand Gucci sold only 1 billion 676 million euros in the first half of the year.

"We plan to raise the price of watches and jewellery products in the euro area by 5%," said Cartire CEO Deng Geshi, the flagship brand of the 25 Geneva international high horological watch exhibition, which opened in January 20th. "But we will keep the price stability in the Swiss market."

Deng Geshi also revealed that he might not rule out further price rises in the future.

The higher level of the summit said that even if Cartire raised prices, it might not be able to fully compensate for the damage to the profit margins caused by the appreciation of the Swiss franc.

Another Swiss luxury giant Swatch group announced in January 22nd that it plans to raise some of its brand watches outside Switzerland. Among them, Baoji, Longines and OMEGA will raise prices by 5%-7%, and individual brands may even raise their prices by 10%.

Patek Philippe also said it was considering adjusting the pricing of the Japanese market. Brand Izumi Otsuka, Japan's chief executive, said the price increase would be between 4%-5%, and the final decision would be made at the end of the month depending on the exchange rate trend.

However, for the future Chinese market, the English website Luxury Society is still optimistic. The website predicts that China will usher in the best market performance since 2012: since the Chinese government began to vigorously develop anti-corruption campaign, the Chinese market will usher in the two digit sales growth for the first time.

The forecast also pointed out that "the slowdown in luxury consumption in Hongkong will contribute to the rising demand in mainland China".