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Five Takeaways from the Stock Market in 2017
Jan 1, 2018 3:12 AM
By Joshua Freedman
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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 an
excess of rough-diamond supply and questions over the future of consumer
demand.
Here are the main points emanating from this year’s stock
performances:
(For the full stock table, see below)
1. US Retail Plunged
Investors showed little confidence in brick-and-mortar
retail, 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 a
strong 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, though
it also had company-specific challenges, such as sexual-harassment allegations
and problems with its credit services.
2. Tiffany Beat Its Rivals
The arrival of Alessandro Bogliolo as CEO and Reed
Krakoff as chief artistic officer, plus some innovative branding
decisions, have boosted confidence in Tiffany & Co.
“New management is showing us that they understand the
challenges and opportunities, and they are not sitting still,” CNBC cited Citi
analysts 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 soared
33%.
3. Asian and European Stocks (Mostly) Rallied
A recovery in China and Hong Kong has given new life to the
region’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 and
their 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 in
Singapore, performed less strongly, declining 44%. An excess of polished diamonds in the Indian
manufacturing sector resulted in weaker sales of the company’s machines.
European luxury stocks also had a strong year, driven by a
recovery in consumer demand, after 2016’s political shakeups had hit public
confidence. Kering, which owns jewelry brands Boucheron and Pomellato, was the
top performer, gaining 81% for the year.
4. Diamond Producers Fell, but Diversified Miners Rose
It was a bad year for the stock prices of Firestone Diamonds
(-81%), Petra Diamonds (-51%) and Mountain Province (-49%), and pretty much
every other diamond-focused miner. Each company had its own specific reasons
for the decline, but the overall picture showed the impact of a rough
oversupply in view of increased production at the major miners and three new mines
that 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 mining
sector, mainly because of rising metal prices.
5. India Recovered from Demonetization
Led by Titan Company (+153%), the Indian jewelry sector
showed 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 invalidate
86% of currency notes hit liquidity.
Selected global industry stocks in 2017:
| |
Dec 29, 2017 (close) |
Jan 3, 2017 (open) |
Chng. |
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| Stock Indexes |
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Chng. |
| BSE |
34,056.83 |
26,616.92 |
7,439.91 |
28.0% |
| Dow Jones |
24,719.22 |
19,872.86 |
4,846.36 |
24.4% |
| FTSE |
7,687.77 |
7,142.80 |
544.97 |
7.6% |
| Hang Seng |
29,919.15 |
21,993.36 |
7,925.79 |
36.0% |
| S&P 500 |
2,673.61 |
2,251.57 |
422.04 |
18.7% |
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| USA |
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| Birks Group |
$1.30 |
$1.06 |
$0.24 |
22.6% |
| JCPenney |
$3.16 |
$8.35 |
-$5.19 |
-62.2% |
| Macy's |
$25.19 |
$36.13 |
-$10.94 |
-30.3% |
| Signet |
$56.55 |
$94.79 |
-$38.24 |
-40.3% |
| Tiffany |
$103.95 |
$77.89 |
$26.06 |
33.5% |
| Walmart |
$98.75 |
$69.24 |
$29.51 |
42.6% |
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| Far East |
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| Chow Sang Sang (HKD) |
18.88 |
14.46 |
4.42 |
30.6% |
| Chow Tai Fook (HKD) |
8.20 |
5.99 |
2.21 |
36.9% |
| Luk Fook (HKD) |
33.55 |
20.15 |
13.40 |
66.5% |
| Sarine (SGD) |
1.00 |
1.80 |
-0.80 |
-44.4% |
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| Europe |
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| LVMH |
€245.40 |
€182.10 |
€63.30 |
34.8% |
| Kering |
€393.00 |
€217.30 |
€180.00 |
80.9% |
| Richemont |
CHF 88.30 |
CHF 68.25 |
€20.05 |
29.4% |
| Swatch Group |
CHF 397.40 |
CHF 319.20 |
€77.50 |
24.5% |
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| INDIA (rupee) |
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| Asian Star |
1,347.85 |
695.00 |
652.85 |
93.9% |
| Gitanjali Gems |
68.30 |
58.25 |
10.05 |
17.3% |
| PC Jeweller |
456.60 |
195.05 |
261.55 |
134.1% |
| Titan |
856.00 |
339.00 |
517.00 |
152.5% |
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| AUSTRALIA |
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| Michael Hill |
AUD 1.23 |
AUD 1.23 |
AUD 0.00 |
0.0% |
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| MINING STOCKS |
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| ALROSA |
RUB 75.06 |
RUB 97.50 |
-RUB 22.44 |
-23.0% |
| Lucapa Diamond |
AUD 0.22 |
AUD 0.43 |
-CAD 0.21 |
-48.8% |
| Lucara Diamond |
CAD 2.81 |
CAD 3.14 |
-CAD 0.33 |
-10.5% |
| Mountain Province |
CAD 3.41 |
CAD 6.75 |
-CAD 3.34 |
-49.5% |
| Stornoway Diamond |
CAD 0.66 |
CAD 1.00 |
-CAD 0.34 |
-34.0% |
| UK (pence) |
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| Anglo American |
1,549.50 |
1,166.00 |
383.5 |
32.9% |
| Firestone Diamonds |
9.75 |
51.02 |
-41.3 |
-80.9% |
| Gem Diamonds |
71.00 |
110.00 |
-39.0 |
-35.5% |
| Petra Diamonds |
78.00 |
160.10 |
-82.1 |
-51.3% |
| Rio Tinto plc |
3,942.00 |
3,168.50 |
773.5 |
24.4% |
Image: Bacho/Shutterstock
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Tags:
Alessandro Bogliolo, Amazon, Anglo American, boucheron, Chow Sang Sang, Chow Tai Fook, citi, De Beers, Dow Jones, Firestone Diamonds, Hong Kong, India, J.C. Penney, Jewelry, Joshua Freedman, kering, Luk Fook, Macy’s, mountain province, Petra Diamonds, Pomellato, Reed Krakoff, retail, Rio Tinto, Share prices, Signet Jewelers, Tiffany, Tiffany & CO., Titan Company
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