Five Takeaways from the Stock Market in 2017
RAPAPORT... In a year of soaring stock prices, US retail shares largely underperformed in 2017 as consumers (and investors) abandoned traditional shopping channels in favor of e-commerce platforms. As a result, familiar names such as J.C. Penney, Macy's and Signet Jewelers slipped this year. So too did diamond-focused miners, amid fears of anexcess of rough-diamond supply and questions over the future of consumerdemand.Here are the main points emanating from this year's stockperformances: (For the full stock table, see below) 1. US Retail PlungedInvestors showed little confidence in brick-and-mortarretail, moving away from stocks such as J.C. Penney (-62%) and Macy's (-30%).The latter showed signs of recovery in the final two months of the year as consumer confidence grew ahead of the holiday season. The sector trailed the Dow Jones Industrial Average,which jumped 24% during the year, buoyed by an improving economy. There was astrong contrast between traditional retailers and tech-driven companies, with Amazon's share price surging 54%this year, while Apple's was up 46%.Signet (-40%) suffered along with its retail peers, thoughit also had company-specific challenges, such as sexual-harassment allegationsand problems with its credit services. 2. Tiffany Beat Its RivalsThe arrival of Alessandro Bogliolo as CEO and ReedKrakoff as chief artistic officer, plus some innovative brandingdecisions, have boosted confidence in Tiffany & Co. "New management is showing us that they understand thechallenges and opportunities, and they are not sitting still," CNBC cited Citianalysts as saying in mid-December. The bank upgraded Tiffany's stock to "buy"from "neutral" in time for the holiday season. Investor behavior reflected this optimism throughout the year: The jeweler's stock soared33%. 3. Asian and European Stocks (Mostly) RalliedA recovery in China and Hong Kong has given new life to theregion's retail sector, with jewelers such as Luk Fook (+67%), Chow Tai Fook(+37%) and Chow Sang Sang (+31%) benefiting in terms of both their sales andtheir share prices. Those stocks mirrored gains on Hong Kong's Hang Seng Index,which jumped 36% for the year. Out of the Far East stocks that Rapaport tracks, Israel-based Sarine Technologies, which lists its shares inSingapore, performed less strongly, declining 44%. An excess of polished diamonds in the Indianmanufacturing sector resulted in weaker sales of the company's machines.European luxury stocks also had a strong year, driven by arecovery in consumer demand, after 2016's political shakeups had hit publicconfidence. Kering, which owns jewelry brands Boucheron and Pomellato, was thetop performer, gaining 81% for the year. 4. Diamond Producers Fell, but Diversified Miners RoseIt was a bad year for the stock prices of Firestone Diamonds(-81%), Petra Diamonds (-51%) and Mountain Province (-49%), and pretty muchevery other diamond-focused miner. Each company had its own specific reasonsfor the decline, but the overall picture showed the impact of a roughoversupply in view of increased production at the major miners and three new minesthat came on stream during the year. By contrast, shares in Anglo American, which owns De Beers,gained 33%, while Rio Tinto was up 24%. This reflected stock rallies in the miningsector, mainly because of rising metal prices. 5. India Recovered from DemonetizationLed by Titan Company (+153%), the Indian jewelry sectorshowed a huge rise. The industry has enjoyed an improvement in demand compared with this time last year, when the government's November 2016 decision to invalidate86% of currency notes hit liquidity.Selected global industry stocks in 2017:
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