Luxury brands feel the heat

For companies from LVMH Moet Hennessy Louis Vuitton SE to BMW AG to Yum! Brands Inc, China is delivering a one-two punch.

Years of surging economic growth that has spurred sales of luxury goods - Louis Vuitton handbags, Tiffany rings, BMW 5-Series cars - as well as mundane items like KFC chicken and Kone elevators, has given way to the deepest slowdown since 1990. Chinese policymakers on Tuesday added to the pain for international companies by devaluing the yuan by the most in two decades, sending shares of European and the United States' automakers, luxury manufacturers and industrial companies slumping.

The policy shift reduces the value of their sales in China and makes the nation's producers more competitive. While the devaluation may help revive growth in China, for now it shows how concerned the authorities are about the slowdown, and that there may be further pain ahead for companies operating there.