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Rapaport TradeWire June 1, 2012
May 31, 2012 6:00 PM
By Rapaport
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Rapaport Weekly Market Comment
June 1, 2012
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All eyes on Vegas shows as U.S. jewelers remain optimistic for Holiday season. U.S. market has been stable in spite of global economic uncertainty that has weakened foreign demand. Graff withdraws $1B IPO as financial markets unfriend Facebook. Christie’s HK sells $80.3M (79% by lot) with Martian Pink 12.04 ct., fancy intense pink diamond selling for $17.4M ($1.4M/ct.). ALROSA 1Q production -19% to 8.1M cts. Shrenuj 4Q sales +11% to $147M, net profit +3% to $2.4M. Japan’s April polished imports -7% to $57M. Rapaport mourns the passing of Jacques Roisen, a leading diamantaire of his generation who helped create New York’s 47th street diamond market.
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| RapNet Data: May 30 |
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| Diamonds |
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915,605 |
| Value |
$6,103,664,464 |
| Carats |
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972,831 |
| Average Discount |
-26.45% |
www.rapnet.com
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Get Current Price List | Subscribe to Rapaport | Join RapNet |
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QUOTE OF THE WEEK
[Given the leaks of synthetics into the pipeline] it is unacceptable for industry organizations to sit idly by and pay mere lip-service to problems and threats as they come to our industry, and industry leaders must be proactive and fearless in fulfilling their fiduciary responsibilities. The DMIA is ready to host a meeting of all players to find a common policy and plan in attacking those who seek to defraud and deceive dealers, retailers and the consuming public.
Ronald J. Friedman | DMIA
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Careers@Rapaport
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The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. View jobs now.
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RETAIL & WHOLESALE
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DMIA Calls for Action to Prevent Synthetics
The Diamond Manufacturers and Importers Association of America (DMIA) called upon domestic and international organizations, grading laboratories, governments and law enforcement to join together in a serious and committed effort to prevent the leakage of synthetic, laboratory-grown diamonds. The DMIA defined these recent leaks as conducted by ''those who have clearly attempted to defraud and deceive.''
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Highlights from Christie's $80M Hong Kong Sale
WATCH NOW:
In this news broadcast, view the top five lots from Christie's Hong Kong sale of Magnificent Jewels, which achieved a total greater than $80 million and was 79% sold by lot. Additionally, the De Beers Group released its annual Report to Society, measuring its commitment to operate in a manner that reflects high standards for the diamond industry. Finally, the Conference Board noted a more pessimistic consumer sentiment in May, but the overall readings remain far below the pre-recession ‘’healthy’’ 100 points.
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Luxury Spending Tepid, Jewelry Share Decreases
U.S. consumers with annual incomes of $100,000 to $249,999, which account for around 21.3 million U.S. households, increased their spending on luxury goods 11% in 2011 compared with 2009, according to Unity Marketing. Consumers with incomes over $250,000, however, reduced luxury spending by 30% year on year in 2011. Overall, luxury goods and services spending grew only 1.3% between 2009 and 2011, with the best performing categories being travel, up 40.8%, kitchenware and cooking tools, up 37%, and entertainment, up 33.6%. Jewelry spending, however, contracted 10.2% during the period.
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Rajesh Exports 4Q Profit Soars
Jewelry manufacturer Rajesh Exports Ltd. reported that net sales rose 37% year on year to $1.57 billion during its fourth fiscal-quarter that ended on March 31.
Net profit for the quarter jumped 78% to $16.2 million primarily due to growth in operating profit out of the retail division. The company currently has 80 Shubh Jewellers retail stores, and has plans to open another 40 stores in the southern Indian state of Karnataka within the next two quarters. It will expand its presence across the country with 500 new stores by 2014.
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SRS FY Profits +19%
SRS Ltd. reported that group net sales rose 11% year on year to $407.3 million, while net profits jumped 19% to $8 million for the fiscal year that ended on March 31. Growth was driven by its jewelry business, which grew 23% to $323.8 million, and its cinema business, which grew 43% to $9.5 million.
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TBZ FY Sales +16% to $249M
Tribhovandas Bhimji Zaveri Ltd. (TBZ) reported that group net sales rose 16% year on year to $249.1 million for the fiscal year that ended on March 31. Net profit jumped 46% to $10.3 million for the company, which currently operates 14 showrooms in 10 cities. TBZ plans to open 43 more retail chains by the end of 2015, funded by the $36 million raised in April through its initial public offering of 16.7 million equity shares.
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Movado's 1Q Sales Profit Improves to $7M
Movado Group's sales in its first quarter that ended on April 30, rose 15.4% year on year to $103.7 million while net profit rose $6.8 million compared with only $511,000 one year ago. Movado's strong performance was driven primarily by growth in the accessible luxury and licensed brand categories.
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Goldiam's 4Q Sales Drop on Weak Jewelry Sales
Goldiam International Ltd. reported that group net sales fell 24% year on year to $8.2 million during its fourth fiscal-quarter that ended on March 31, due in large part to weak jewelry sales. Jewelry sales for the quarter fell 42% to $6.5 million. Net profits declined 38% to $288,085 partly due to higher finance costs and tax expenses. For the fiscal year, Goldiam’s net sales increased 3% to $44.3 million, while net profit fell 18% year on year.
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Shrenuj's 4Q Profits +3%
Shrenuj & Co. Ltd. reported that group net sales rose 11% year on year to $147 million during its fourth fiscal-quarter that ended on March 31. The growth was driven by strong diamond sales, which rose 18% to $126.9 million. Sales at the company’s jewelry business, however, fell 9% to $26.3 million. Net profits increased 3% to $2.4 million during the quarter as expenses and finance costs rose while other income declined. For the fiscal year, Shrenuj’s net sales increased 28% to $569.6 million while net profit rose 24% year on year to $12.7 million. Shrenuj also reported that former Botswana President Festus G. Mogae joined its board as an independent director. Mogae, who was Botswana’s president from 1998 to 2008, currently serves as special envoy of the United Nations secretary-general on climate change.
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Asian Star's 4Q Profits Drop
Asian Star Co. Ltd. reported that group net sales rose 24% year on year to $92.7 million during its fourth fiscal-quarter that ended on March 31. Net profits, however, fell 30% to $2 million. Sales at the company’s cut and polished diamond segment increased 16% to $82.2 million, while jewelry sales more than doubled to $18.5 million from $8.6 million.
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Graff Pulls Its IPO in Hong Kong
Graff Diamonds pulled an initial public offering (IPO) in Hong Kong that had planned to raise $1 billion, due to concerns over declining stock markets, especially in Asia. As of mid-May, total investment banking revenues from new listings in Asia, excluding Japan, had fallen to $434 million in the year to date, down almost 70% from the same period a year ago. Graff planned to price its IPO on Friday and begin trading on the Hong Kong stock market on June 7. The compay noted, however, that its plans to open five new retail outlets in Asia this year would be unaffected by the decision to pull the IPO.
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Beny Sofer Partners With Roberto Demeglio
Beny Sofer Inc. formed a partnership with Italian designer Roberto Demeglio to become his exclusive distributor for North America as well as the Caribbean. Beny Sofer has been expanding into the finished jewelry market this past decade and created its own line of Sofer jewelry, most notably the Diamond Infinity Collection.
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Gitanjali Opens Luxury Jewelry Store in Mumbai
Gitanjali Group recently opened luxury store Giantti at the Grand Hyatt hotel in Mumbai. The new 500-square-foot store was also the setting for the company's first launch of the Nakshatra collection, which was unveiled by Bollywood star Katrina Kaif (pictured), who is also the brand ambassador of Nakshatra. The store offers international luxury brands it licenses such as Io-SI, Nouvelle Bague, R.Porrati, Stefan Hafner, World of Silver and its domestic brands, Nakshatra, Parineeta and Nizam.
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GENERAL
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Charles Taylor Sentenced to 50 Years in Prison
The U.N-backed Special Court for Sierra Leone (SCSL) sentenced former Liberia President Charles Taylor to a single term of 50 years in prison for aiding and abetting rebels during the long-running civil war in Sierra Leone. Taylor was convicted of all 11 counts of war crimes against humanity and for using ‘’conflict diamonds’’ to fund rebels between 1996 and 2002. He was convicted of offenses such as murder, rape, sexual slavery, recruiting child soldiers, enforced amputations and pillage. Following Taylor's sentencing, the president of the court will decide where he will serve his sentence, which is likely to be in the U.K. Prosecutors had initially called for Taylor to be given an 80 year sentence.
At an earlier hearing, Taylor had told the SCSL that he was saddened by the atrocities and crimes committed in Sierra Leone, but denied that he aided the rebels who committed the abuses. He had asked that "reconciliation and healing and not retribution should be the guiding principles in your honors’ task” in determining his sentence.
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Nationwide Strike Hits Indian Diamond Market Activity
Indian diamond market activity was affected on Thursday due to the nationwide strike called by the country’s opposition political parties to protest the recent sharp hike in fuel prices. Market activity was also affected in Surat, the world's biggest diamond cutting and polishing center, as the Surat Diamond Association (SDA) supported the strike. Normal routines were disrupted across the country and there were reports of sporadic incidents of violence in a few places. State-run oil companies recently raised petrol prices by more than $0.13 per liter.
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AGS Names Gardner as Board President
The American Gem Society (AGS) elected certified gemologist David Gardner, of David Gardner Jewelers, as president of the society’s board of directors. Gardner will take over from Cathy Calhoun of Calhoun Jewelers. The appointment was made during the annual AGS conclave held in Miami, on April 28. Gardner has 40 years of experience in the jewelry industry.
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Former DMIA President Passes Away
Jacques Roisen, a former president of the Diamond Manufacturers and Importers Association of America (DMIA) and of the International Diamond Manufacturers Association (IDMA), passed away in New York. Roisen was an honorary life president of both organizations, and former co-chair of the Diamond Industry Steering Committee (DISC). Roisen, an icon of the diamond industry was honored by the DMIA in 2006 at their 75th anniversary gala dinner celebration and was known to be a passionate leader, mentor, and friend.
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MINING
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ALROSA's 1Q Production -19%
ALROSA's executive committee noted that rough diamond production for the company fell 19% year on year to 8.088 million carats in the first quarter. The committee also approved the concept of developing a group diamond cutting and polishing complex, and introducing a risk management system to improve investment activity among other business items on the agenda. Executives further approved a development strategy for ALROSA's projects across Africa in order to quickly expand and increase efficiency when evaluating new areas of exploration.
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RioZim in Talks to Buy Murowa Mine
Zimbabwe's RioZim Limited has begun talks with Rio Tinto to buy the mining giant’s stake in the Murowa diamond mine. Rio Tinto owns a 78% stake in Murowa while RioZim owns the remaining 22%. The talks follow a decision by Rio Tinto to divest from its diamond business, which includes the Argyle mine in Australia and a 60% stake in the Diavik mine in Canada.
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Rockwell's FY Net Loss Grows to $14M
Rockwell Diamonds reported that revenue fell 20% year on year to $34.2 million for its fiscal year 2012, which ended on February 29. The junior miner's net loss grew to $13.7 million compared with $5 million the previous year. Diamond production fell 33% year on year to 17,416 carats. Sales from rough diamonds dropped 30% to $26.4 million, while revenue from beneficiation—representing profit from cut and polished sales through Steinmetz Diamond Group—jumped 64% to nearly $7.9 million. The majority of rough diamond revenue came from Rockwell's Saxendrift operation where sales jumped 26% year on year to $17.5 million.
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ECONWATCH
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Diamond Industry Stock Report
While European stocks were down and India reported a mix of gains and losses, U.S. retailers and jewelers reported significant losses this week, though there were notable exceptions. Among the biggest losses were Kohl's (-8.5%), Nordstrom (-6.1%), Birks & Mayors (-5.1%), Zale (-4.9%), Macy's (-4.5%), and Saks (-3.9%). A few retailers bucked the downward trend, most notably LJ Intl. (+7.0%) and Signet (+7.6%). Mining stocks were a mixed bunch, with losses by True North Gems (-7.7%), Mwana Africa (-7.7%), Peregrine Diamonds (-4.9%), Shore Gold (-3.8%), and Mountain Province (-2.5%), and gains by Rockwell Diamonds (+11.6%), Lucara Diamond (+8.4%), Stornoway Diamond (+2.5%), and Firestone Diamonds (+2.5%).
Read the extended industry stock report for this past week.
| | May 31 | May 24 | Chng. | | | $1 = Euro | 0.807 | 0.798 | 0.010 | | | $1 = Rupee | 56.08 | 55.65 | 0.4 | | | $1 = Israel Shekel | 3.91 | 3.85 | 0.05 | | | $1 = Rand | 8.48 | 8.35 | 0.13 | | | $1 = Canadian Dollar | 1.03 | 1.02 | 0.01 | | | | | | | | | Precious Metals | | | | | | Gold | $1,563.00 | $1,559.60 | $3.40 | | | Platinum | $1,413.00 | $1,419.00 | -$6.00 | | | | | | | | | Stock Indexes | | | | Chng. | | BSE | 16,218.53 | 16,222.30 | -3.77 | 0.0% | | Dow Jones | 12,393.45 | 12,529.75 | -136.30 | -1.1% | | FTSE | 5,306.95 | 5,350.05 | -43.10 | -0.8% | | Hang Seng | 18,629.52 | 18,666.40 | -36.88 | -0.2% | | S&P 500 | 1,310.33 | 1,320.68 | -10.35 | -0.8% | | Yahoo! Jewelry | 919.92 | 913.67 | 6.25 | 0.7% |
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INDIA MARKET REPORT
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Polished and Rough Trading Activity
Polished trading is restrained and the dollar reached new highs against the rupee, furthermore liquidity is very tight and there is ample supplies of rough in the market.
Read the full report.
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