UBS Predicts Drop in Diamond-Jewelry Sales

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)