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Four Trends from a Tough Year for Stocks
Jan 2, 2019 5:19 AM
By Joshua Freedman
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RAPAPORT... Diamond-related shares mainly fell in 2018, in line with a
global stock-market downturn. Investors fretted about trade tensions, uncertain
consumer demand and the impact of the US Federal Reserve raising interest rates
in December. The S&P 500 index ended the year more than 6% down, while Hong
Kong’s Hang Seng slid 14%.
It wasn’t all bad: Some diamond miners did well, while
retail offered a few exceptions to the rule. Here were the main takeaways from
the year in stocks (see full table below):
1. US retailers slumped.
Growing competition from e-commerce players, and shaky
outlooks for American consumer spending, made it a difficult time for
brick-and-mortar chains. Signet fell 44% in 2018, with the bulk of its losses
coming in December following disappointing third-quarter earnings and a wider
Wall 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 nearly
everyone.
The US-China tariff dispute, and the resultant depreciation
in the Chinese yuan, dented Hong Kong jewelry stocks, with Chow Sang Sang
(-38%) leading the declines. Tiffany & Co. (-23%) also suffered, as the
currency devaluation dampened Chinese tourists’ spending power abroad.
European luxury stocks generally dropped due to the same
trade concerns, as well as nerves over Brexit and the state of the eurozone
economy, with the region’s Euro Stoxx 50 index down about 15%. Disappointing
profit figures and a buyback of watches knocked Cartier owner Richemont from its peak in
mid-May, and the stock continued to fall to a full-year decline of 29%. Swatch
Group slid 28%. Pandora slumped in mid-May after weak Chinese sales, and never
recovered, recording a 61% decrease for the year.
Gucci owner Kering (+13%) outperformed the European market
after experiencing positive sales across its brands, for which jewelry is a
relatively small element.
3. Big diamonds meant
big money.
Gem Diamonds (+54%) was the best-performing diamond miner, with
a record year for large-stone discoveries at its Letšeng mine boosting
financial results.
However, weakness in the small-stone market hammered miners
such as Stornoway Diamond Corporation (-69%) and Firestone Diamonds (-66%).
As for other producers, Alrosa (+31%) pleased the markets
with its strong profits, boosted by an overall improvement in Russian equities
in 2018 amid hopes of improved relations with the US.
Diversified miners had a reasonable year, with De Beers
owner Anglo American up 12%. Stock performances in that sector are mainly
driven by factors such as metal prices.
4. It can’t get much worse than Gitanjali.
India’s Gitanjali Gems (-99%) lost almost all its value
after its owner, Mehul Choksi, was accused of a massive bank fraud. That
episode, combined with a sluggish Indian economy and the devaluation of the
rupee, had a wider impact on Mumbai equities, with PC Jeweller (-82%) and Asian
Star (-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 more
organized jewelers that’s gaining market share while weaker rivals fall behind.
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December 31, 2018 (close) |
January 2, 2018 (open) |
Chng. |
Chng. |
| Stock Indexes |
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| BSE |
36,068.33 |
33,913.55 |
2,154.78 |
6.4% |
| Dow Jones |
23,327.46 |
24,809.35 |
-1,481.89 |
-6.0% |
| FTSE |
6,728.13 |
7,687.80 |
-959.67 |
-12.5% |
| Hang Seng |
25,845.70 |
30,028.29 |
-4,182.59 |
-13.9% |
| S&P 500 |
2,506.85 |
2,683.73 |
-176.88 |
-6.6% |
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| USA |
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| Birks Group |
$0.95 |
$1.36 |
-$0.41 |
-30.1% |
| JCPenney |
$1.04 |
$3.25 |
-$2.21 |
-68.0% |
| Macy’s |
$29.78 |
$25.81 |
$3.97 |
15.4% |
| Signet |
$31.77 |
$56.74 |
-$24.97 |
-44.0% |
| Tiffany |
$80.51 |
$104.57 |
-$24.06 |
-23.0% |
| Walmart |
$93.15 |
$99.30 |
-$6.15 |
-6.2% |
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| Far East |
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| Chow Sang Sang (HKD) |
11.62 |
18.86 |
-7.24 |
-38.4% |
| Chow Tai Fook (HKD) |
6.53 |
8.14 |
-1.61 |
-19.8% |
| Luk Fook (HKD) |
22.35 |
33.50 |
-11.15 |
-33.3% |
| Sarine (SGD) |
0.46 |
1.02 |
-0.57 |
-55.4% |
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| Europe |
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| LVMH |
€258.20 |
€245.65 |
€12.55 |
5.1% |
| Kering |
€411.60 |
€364.34 |
€47.26 |
13.0% |
| Richemont* |
CHF 63.00 |
CHF 88.40 |
-€25.40 |
-28.7% |
| Swatch Group* |
CHF 286.70 |
CHF 397.10 |
-€110.40 |
-27.8% |
| Pandora |
DKK 265.30 |
DKK 680.00 |
-€414.70 |
-61.0% |
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| INDIA (rupee) |
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| Asian Star |
738.00 |
1,300.00 |
-562.00 |
-43.2% |
| Gitanjali Gems |
1.03 |
72.00 |
-70.97 |
-98.6% |
| PC Jeweller |
86.15 |
468.20 |
-382.05 |
-81.6% |
| Titan |
929.95 |
855.00 |
74.95 |
8.8% |
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| AUSTRALIA |
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| Michael Hill |
AUD 0.62 |
AUD 1.23 |
-AUD 0.61 |
-49.6% |
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| MINING STOCKS |
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| Alrosa* |
RUB 98.62 |
RUB 75.21 |
RUB 23.41 |
31.1% |
| Lucapa Diamond |
AUD 0.21 |
AUD 0.23 |
-CAD 0.02 |
-8.9% |
| Lucara Diamond |
CAD 1.48 |
CAD 2.82 |
-CAD 1.34 |
-47.5% |
| Mountain Province |
CAD 1.95 |
CAD 3.33 |
-CAD 1.38 |
-41.4% |
| Stornoway Diamond |
CAD 0.20 |
CAD 0.65 |
-CAD 0.45 |
-69.2% |
| UK (pence) |
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| Anglo American |
1,747.80 |
1,559.00 |
188.8 |
12.1% |
| Firestone Diamonds |
3.33 |
9.80 |
-6.5 |
-66.1% |
| Gem Diamonds |
111.00 |
72.00 |
39.0 |
54.2% |
| Petra Diamonds |
37.68 |
65.99 |
-28.3 |
-42.9% |
| Rio Tinto |
3,730.00 |
3,943.50 |
-213.5 |
-5.4% |
*Starting price for stocks with asterisk was at market opening on Jan. 3, 2018.
Image: Stock-market quotes. (Shutterstock)
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Tags:
Jewelry, Joshua Freedman, mining, Rapaport News, retail, stock prices, stocks
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