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What is the best place to buy a luxury watch? In China, more and more high-end shoppers are turning to social media. That is an opportunity for luxury brands seeking younger customers. For social networks themselves — including TikTok, currently the subject of a complex US-China carve-up — it could be a big driver of value.

The first to benefit from this trend has been Douyin, TikTok’s sister platform in China. There, shoppers buy luxury items the same way they buy lipstick or air fryers: by tapping into a livestream. A chatty host demos products and makes jokes, while viewers can buy anything they see on the stream with a single tap. It has become the default way millions of young consumers shop in the country.

Douyin sold 46 per cent more merchandise by value in the year to July than it did in the same period of 2024, according to the company. It became the third-largest online shopping platform in China last year. European brands have taken notice. Versace has hosted livestreams and opened an official Douyin flagship store. Burberry joined the platform’s “Super Brand Day” and collaborated with Douyin to dress virtual avatars.

TikTok is trying to replicate Douyin’s success globally by rolling out many of the same features in markets such as the US, including in-app checkout systems, product search tabs and shoppable videos. Its brand makes its push into luxury a tough sell: outside China, TikTok’s commerce business is more like a virtual dollar store.

Its efforts may nonetheless bear fruit. After all, TikTok and its ilk have a strong following among the young. More than half of Gen Z discovers products on Instagram and TikTok, according to Emarketer. Gen Z’s share of global luxury spending is expected to rise from 4 per cent today to 25 per cent by 2030, according to BCG.

This suggests that luxury groups — which have historically been cautious about selling on social media due to brand dilution concerns — may reconsider. Staying away from TikTok would mean missing out on their largest group of future customers.

Even if the luxury companies themselves prove hard to sway, they are not the only ones selling handbags. The market for second-hand fashion and luxury is growing rapidly. The global resale market size is projected to reach up to $360bn in the next five years, according to BCG. An average annual growth rate of 10 per cent means resale is growing nearly three times faster than the primary luxury market. Resale platforms like The RealReal have seen rising shopper demand and growing investor interest.

With younger consumers increasingly important and sellers proliferating, the next phase of the luxury market overlaps neatly with social media platforms. Future luxury buyers are now forming their brand loyalties, and TikTok is becoming the place where they do it.

june.yoon@ft.com

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Listings in the Middle East have dropped more than a third to the weakest level since 2020, as lower oil prices put pressure on Saudi Arabia’s economy and sell-offs of newly floated companies deterred investors.

Companies in the region had raised $6.5bn in initial public offerings by the end of November, compared with $9.9bn in the same period last year, according to financial data platform Dealogic.

Listings for the full year are set to be the weakest since companies raised $2.4bn in 2020, and down sharply from 2022 when IPOs pulled in $22.5bn from 62 deals.

In addition to weaker oil prices, investors and bankers have blamed poor performances by newly listed companies and a dearth of privatisations, after offerings by state-owned companies and financial regulatory reforms had driven a healthy pipeline of deals after the pandemic.

Ali Khalpey, head of Middle East at Cantor, said the slowdown came after a “very strong run” and investors were now “looking back and taking stock of where valuations were . . . It’s no longer ‘let’s all pile into an IPO’.”

Carl Tohme, Dubai-based fund manager at hedge fund Cheyne Capital, said Saudi Arabia and the United Arab Emirates had “enjoyed three or four years of really positive momentum” due to weakness in China, a strong dollar and “the structural story with all the reforms” in oil-rich Gulf countries.

“Now, you have China that is investable again and doing very well, [and] the dollar is weak, especially against emerging market currencies. While the fundamental story of population growth in the UAE is still strong, the Saudi story is challenged mainly by the lower oil price,” he said.

The UAE’s markets in Dubai and Abu Dhabi have raised just $1bn this year, down from $6bn last year and a high of $12bn in 2022.

A much-anticipated IPO by Etihad, Abu Dhabi’s national carrier, failed to materialise this year. Dubai’s stock market suffered a setback when local online classifieds company Dubizzle pulled its planned listing, saying it was waiting for “optimal timing”.

Saudi facilities management company EFSIM this month became the latest to cancel an IPO, pulling a flotation that was expected to give it a valuation of almost $300mn.

Private businesses in the region also get crowded out as investors favour state-owned companies that enjoy monopolies and offer investors steady and secure dividends.

Anita Gupta, chief investment officer at Dubai-based Wealthbrix Capital Partners, said: “I would say that we are spoiled in this market . . . [by] very high dividend-yielding entities with quality assets.”

In contrast, shares of some of the highest-profile companies that listed last year have slumped.

That created “a big overhang in the market”, said Finlay Wright, head of equity markets for the Middle East and Asia at Rothschild. “It makes people nervous around the outlook for other entities that might come.”

Delivery company Talabat has sunk about 25 per cent since its Dubai listing in December 2024, in the Gulf’s biggest IPO of the year. Lulu Retail, a supermarket chain, has fallen about 40 per cent since its debut in Abu Dhabi in November last year, while grocer Spinneys has lost about 6 per cent since floating in Dubai. 

Dubai’s two IPOs of 2025 capitalised on soaring property prices, with construction company ALEC, majority owned by the Dubai government, raising $381mn. Dubai Holding, owned by the emirate’s ruler, raised $584mn floating a real estate investment trust. IT group Alpha Data raised $163mn in Abu Dhabi, the exchange’s sole IPO this year. 

Saudi Arabia, the region’s largest economy, has had the most IPOs so far, with 36 companies joining Riyadh’s Tadawul stock exchange and raising $4bn — roughly the same as last year despite the all-share index falling about 12 per cent year to date. Riyadh typically attracts a higher number of smaller listings than the UAE.

But investor confidence has been weighed down by lower oil prices and a widening fiscal deficit, which have led the government to reassess some megaprojects aimed at revamping its oil-reliant economy.

Share prices of major companies that listed on Riyadh’s bourse this year have slumped. Budget airline Flynas is down 17 per cent since raising $1bn in June, while packaging maker United Carton Industries has fallen 40 per cent since it raised $160mn the previous month.

Several companies “have missed the earnings guidance which had been out in the market, and that has a very negative effect on price performance”, said Rothschild’s Wright.

Smaller Gulf countries have been unable to capitalise on last year’s momentum, with Bahrain and Kuwait — which both managed one IPO last year — having none in 2025. Oman raised $333mn from one listing this year, having secured $2.5bn in three IPOs in 2024.