Rapaport Weekly Market Comment

Polished trading slower than expected after
Hong Kong show. Shortages supporting prices as manufacturers ramp up polished
production. Good demand for dossiers. Lower colors hot in carat sizes. China
outlook positive, but Jan.-Feb. retail sales +9.7%, slightly below
expectations. Signet Jewelers investing in online and off-mall to restore
growth, as shares tumble -20% after FY2018 sales -2% to $6.3B, profit -4% to
$519M. Gem Diamonds 2017 revenue +27% to $214M, profit of $21M vs. $140M loss,
sells 910 ct., D, type IIa Lesotho Legend for $40M ($43,956/ct.). US Feb.
polished imports +3% to $1.8B, polished exports +22% to $1.5B.

Fancies: Fancy shapes mixed, with curves better than squares. Ovals hot,
Marquises strong, followed by Pears and Cushions. Emeralds and Radiants fair,
Princesses still weak. Oversizes selling well. Steady demand for fine-quality 6
to 10 ct. Ovals, Pears and Emeralds, with limited supply. US supporting market
for commercial-quality, medium-priced fancies under 1 ct. Far East demand
improving as consumers seek fancy shapes at better prices. Off-make, poorly cut
fancies illiquid and hard to sell, even at very deep discounts.

United States: Dealers optimistic, with steady post-holiday orders.
Good demand for 1 ct., G-J, VS-SI diamonds. Curved fancy shapes continue to
improve, with strong interest in cushion, modified-brilliant, 1.5 to 2.5 ct.
goods. JA show quiet, shifting focus to independent designers and lower-quality
jewelry.

Belgium: Slower market. Dealers busy with follow-up after Hong Kong show. Pointer
sizes driving demand, with shortages of nice-makes (3X, no-fluorescence)
supporting prices. 1 to 2 ct., H-K, VS-SI GIA stones also selling well. Stable rough
trading during monthly Alrosa sale.

Israel: Polished trading quiet, with fewer dealers in the bourse. Many traveling
to the US to sell, but buyers cautious. Good demand for nice SIs. 3X selling at
significant premium to VG. Large stones selling well, spurring demand for “specials”
at rough tenders.

India: Polished market relatively slow. Dealers trying to boost sales before
financial year’s end on March 31, offering higher discounts for hard-to-move merchandise.
Firm prices for new production, particularly 0.30 to 0.50 ct., G-J, VS-SI (3X,
no-fluorescence) GIA dossiers. Manufacturing stable after strong rough buying
in Jan.-Feb. Liquidity concerns as banks tighten credit to large manufacturers
following alleged Nirav Modi-Gitanjali fraud.

Hong
Kong: Positive mood, even withtrading calmer since
the show. Shortage of good-quality VS2-SI2 stones. Shift in demand to lower K-M
colors. 3 ct.+ diamonds also selling well. Retail sales steady following
Chinese New Year season.