Hermès International, the maker of the iconic Birkin handbag, soared past €200 billion ($218 billion) in market value for the first time ever this week, surpassing Swiss drugmaker Novartis AG.

The stock has been rallying along with other luxury shares this year, as investors see the sector as capable of withstanding an economic downturn, especially as China’s post-Covid recovery revives demand for high-end designer items. Hermès has rallied about 30 percent so far in 2023.

The company is now the eighth-most valuable name across the pan-European Stoxx 600 index. It is second in the luxury space only to France’s LVMH Moet Hennessy Louis Vuitton SE, which reigns supreme with a €420 billion price tag, lifting the fortune of its controlling shareholder Bernard Arnault past $200 billion this week.

And the maker of silk scarves is now worth more than the combined value of a raft of French companies across several sectors, including Airbus SE, carmaker Renault SA, media conglomerate Vivendi SE, grocer Carrefour SA, lender Societe Generale SA and telecom firm Orange.

“Although Hermès is unlikely to be immune to the risk of slowing trends globally due to increasingly complex macro environment, we expect its unique supply-driven business model to drive its continued outperformance,” UBS Group AG analysts led by Zuzanna Pusz wrote in a note published April 4.

Even within luxury, some analysts consider Hermès to be in a category of its own as far as pricing power is concerned. Demand for its handbags typically surpasses its production capacity, despite starting price tags of €8,000 or more for the most popular models. Many bags also enjoy a higher resale value.

As part of plans to boost output, Hermès will inaugurate a new leather manufacturing plant in Louviers, Normandy, on Friday.

Meanwhile, analysts are busily revising up their target prices on Hermès ahead of its first-quarter results on April 14. Most expect the company to confirm the endless appetite for perfume, handbags and silk scarves among wealthy consumers in Asia and across the globe.

But Hermès is just one of several European companies surfing the boom in luxury shares, with British raincoat-maker Burberry Group Plc and German fashion brand Hugo Boss AG also among those benefiting.

The rally in luxury shares has turned Paris into Europe’s top stock market, surpassing London, and the gap between the capitals has widened this year.

By Angelina Rascouet, Julien Ponthus and Jan-Patrick Barner

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