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UBS Predicts Drop in Diamond-Jewelry Sales

US stock volatility likely to affect demand, bank cautions.
Oct 2, 2019 8:32 AM   By Rapaport News
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RAPAPORT... Global diamond-jewelry demand will decline 2% this year as stock-market volatility in the US is likely to affect consumer sentiment, UBS predicted.

“Demand in 2019 [to date] has been lackluster, and we expect a modest decline in global diamond-jewelry sales in [the 2019 fiscal year],” the investment bank said.

UBS has been bearish about US stocks, and in May forecast that the S&P 500 would slide to 2,550 by the end of 2019, representing a 13% decrease from its current level of 2,940. “If this thesis plays out, it would likely have a negative impact on sentiment, and most likely dampen any recovery in US jewelry demand,” analysts at the bank explained in a report September 20.

The bank was more positive about Chinese demand, observing signs of improvement as the trade war becomes the “new normal.” In a survey the Swiss bank carried out in July, it found that 79% of more than 1,000 Chinese luxury consumers expected their personal finances to improve in the next 12 months, compared with 69% in 2018.

This measure is historically well correlated with luxury sales growth, according to the note by the bank’s London branch.

However, Chinese interest has shifted to lower-priced items, with sales of non-diamond jewelry increasing as a percentage of total jewelry sales in the country, the report continued. In the July survey, Chinese consumers said 25% of all the jewelry they had bought in their lifetime contained natural diamonds, compared with 37% when UBS carried out a similar questionnaire in December 2017.

Image: A diamond ring. (Shutterstock)
Tags: consumer demand, diamond jewelry, Francois Trahan, Jewelry, Jewelry demand, Rapaport News, retail, stock market, UBS, US
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