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Trump Effect: Diamond Trade Optimistic For 2017

Dec 29, 2016 3:36 AM   By Joshua Freedman
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As 2016 draws to a close, Rapaport News took the opportunity to speak with leading industry experts about the past year and their expectations for the next 12 months.

Most agreed 2016 was a challenging year, to say the least. Interviewees were split on their forecast for polished diamond prices in 2017 even though they shared a relatively strong sense of optimism for the New Year. And as for U.S. President-Elect Donald Trump, it seems confidence is flying fairly high that his proposed economic policies will improve trading conditions.

Here’s what the following diamantaires had to say about the past year and the path that lies ahead:
  • Michael Meirov, CEO of MID Diamonds, a Ramat Gan-based manufacturer and trader
  • Sabyasachi Ray, Mumbai-based executive director of the Gem & Jewellery Export Promotion Council
  • Stéphane Fischler, Antwerp-based partner at manufacturing and trading company Fischler Diamonds
  • Leibish Polnauer, president of Ramat Gan-based Leibish & Co., a supplier of fancy-color diamonds
  • Russell Mehta, managing director of Mumbai-based manufacturer Rosy Blue
  • Alan Bronstein, owner, Aurora Gems, a New York-based fancy-color diamond supplier
What are your expectations for 2017?

Meirov: We expect next year to be good. The mood in the stock market is optimistic, with the Dow Jones Industrial Average trading at record levels. Wall Street is going to get bonuses in 2017 – things look bright!

Ray: First, U.S. jewelry retail sales have increased and the trend there is strong. Second, the Diamond Producers Association in the U.S. will give a big push to the industry. Third, to aid differentiation between natural and lab-grown diamonds, U.S. jewelers should lobby the government into introducing legislation on a harmonized code for lab-grown diamonds, as is the case in some other countries.

Fischler (pictured, right)In essence, I would expect a more positive effect for the market and high retail sales overall, but I don’t expect higher polished prices. I do expect some strengthening of rough prices.

Polnauer: I expect great business ahead, with a substantial increase in price and sales in polished goods across the board.

Which was the most significant external factor that affected your business in 2016?

Meirov: Oil prices had plummeted. There were also problems in moving money around the world, while bank regulations also had an impact.

Ray: The single most important factor was finance, which suddenly turned negative. We believe banks that have financed the industry in the past should continue to do so.

Fischler: The consolidation of financing in the industry. A lot of players have been left out and are in need of more credit – both manufacturers and some traders.

Mehta: Every day something happens that affects the business. It can be Trump’s election or Modi’s demonetization – there are so many things that we forget what happened in the first half. We live in a world that is characterized by ‘VUCA’ – volatility, uncertainty, complexity, and ambiguity.

Polnauer: Monetary restriction in Hong Kong and China. 

Bronstein2016 has been challenging, with competition from synthetic diamonds gaining momentum.

What’s the biggest cause of optimism for 2017?

Meirov: There’s a better mood in the marketplace, but that can change quickly. At the moment, things are optimistic. Diamond prices have hit a bottom and are going to start picking up, that’s my feeling. At the moment there is a shortage of goods in the market because of the Indian liquidity situation since demonetization, but this can also change very quickly.

Ray: The new U.S. government – positive things are happening and it’s a change of direction. The Chinese market is stabilizing and showing the first signs of growth.

Fischler: In the big markets, especially in the U.S., we’re going to see a loosening of regulations that might result in more positive consumer attitudes toward diamonds in the short term. There’s going to be some shake-up in trade relationships around the world. That might also be positive for diamonds in the short term.

Mehta: I’m looking for that silver lining. The biggest source of optimism would be the fact that people have learnt their lesson of the past few years. Hopefully, manufacturers will now focus more on margins than revenue. That would set everything right.

(pictured, left): If our industry works together to project an honest and true message, consumers will choose the deeper meaning of natural diamonds over the lookalikes created in laboratories.

Polnauer: Donald Trump and the improved market optimism, and the positive consumer sentiment.

What do you fear the most in 2017?

Ray: Industry financing becoming tighter.

Fischler: More ‘blacks swans’ [unexpected and rare events] à la Brexit and Trump – big geopolitical events. The world has been much less predictable.

Mehta: The mining industry flooding the industry with rough diamonds because of new mines entering the market. I see demand stagnant or maybe a bit down in 2017.

What was the most beautiful or significant diamond or piece of jewelry you saw or handled in 2016?

Ray: Kate Winslet wearing a Nirav Modi collection at the Oscars – the fact she wore Indian jewelry was important for us.

Fischler: It wasn’t very large, but it was a beautiful, beautiful 3-carat pear-shaped diamond. One of the stones you fall in love with and are really sad to separate from.

Polnauer: Diamond earrings featuring two pear-shaped, 4.16-carat total weight, fancy vivid yellow diamonds, mounted in 18-karat white-and-yellow gold.
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Tags: Antwerp, Diamond Producers Association, Donald Trump, Fischler Diamonds, GJEPC, Jewelry, Joshua Freedman, Leibish & Co., Leibish Polnauer, Michael Meirov, MID Diamonds, mumbai, Ramat Gan, retail, Sabyasachi Ray, Stephane Fischler, u.s.
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