Four Trends from a Tough Year for Stocks
RAPAPORT... Diamond-related shares mainly fell in 2018, in line with aglobal stock-market downturn. Investors fretted about trade tensions, uncertainconsumer demand and the impact of the US Federal Reserve raising interest ratesin December. The S&P 500 index ended the year more than 6% down, while HongKong's Hang Seng slid 14%. It wasn't all bad: Some diamond miners did well, whileretail offered a few exceptions to the rule. Here were the main takeaways fromthe year in stocks (see full table below): 1. US retailers slumped. Growing competition from e-commerce players, and shakyoutlooks for American consumer spending, made it a difficult time forbrick-and-mortar chains. Signet fell 44% in 2018, with the bulk of its lossescoming in December following disappointing third-quarter earnings and a widerWall Street rout in the final weeks of the year. Macy's (+15%) bucked the trend as it reported good financial results. 2. The trade war hit nearlyeveryone. The US-China tariff dispute, and the resultant depreciationin the Chinese yuan, dented Hong Kong jewelry stocks, with Chow Sang Sang(-38%) leading the declines. Tiffany & Co. (-23%) also suffered, as thecurrency devaluation dampened Chinese tourists' spending power abroad. European luxury stocks generally dropped due to the sametrade concerns, as well as nerves over Brexit and the state of the eurozoneeconomy, with the region's Euro Stoxx 50 index down about 15%. Disappointingprofit figures and a buyback of watches knocked Cartier owner Richemont from its peak inmid-May, and the stock continued to fall to a full-year decline of 29%. SwatchGroup slid 28%. Pandora slumped in mid-May after weak Chinese sales, and neverrecovered, recording a 61% decrease for the year. Gucci owner Kering (+13%) outperformed the European marketafter experiencing positive sales across its brands, for which jewelry is arelatively small element. 3. Big diamonds meantbig money. Gem Diamonds (+54%) was the best-performing diamond miner, witha record year for large-stone discoveries at its Let??eng mine boostingfinancial results. However, weakness in the small-stone market hammered minerssuch as Stornoway Diamond Corporation (-69%) and Firestone Diamonds (-66%). As for other producers, Alrosa (+31%) pleased the marketswith its strong profits, boosted by an overall improvement in Russian equitiesin 2018 amid hopes of improved relations with the US. Diversified miners had a reasonable year, with De Beersowner Anglo American up 12%. Stock performances in that sector are mainlydriven by factors such as metal prices. 4. It can't get much worse than Gitanjali. India's Gitanjali Gems (-99%) lost almost all its valueafter its owner, Mehul Choksi, was accused of a massive bank fraud. Thatepisode, combined with a sluggish Indian economy and the devaluation of therupee, had a wider impact on Mumbai equities, with PC Jeweller (-82%) and AsianStar (-43%) also losing significant ground. Even so, the Bombay Stock Exchange's Sensex index was up 6%for the year. Titan Company (+9%) outperformed that, as it's one of the moreorganized jewelers that's gaining market share while weaker rivals fall behind.
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