Martin Rapaport Predicts Negligible Impact of Brexit on Diamond Trade

28/06/2016 01:10

Martin Rapaport has released a statement claiming that due to the EU not being a major diamond consumer in recent years, with demand expected to fall even further as a result of potential currency and equity downturns in the EU and Great Britain, the impact of the Brexit will be that, "Global investment demand for higher quality diamonds as a store of value will increase due to global economic and political uncertainty." He does not anticipate that Chinese or Indian diamond demand will be impacted in a negative way. Furthermore, "The important U.S. market will remain healthy and retain growth. We do not expect any significant medium to long term negative impact on the U.S. diamond market. While demand may benefit as a stronger dollar increases purchasing power, a short term decline in equity prices and wealth may reduce demand during the quiet summer months."

He does, however, anticipate a potential crunch on already-strained liquidity. "While Brexit is not expected to significantly reduce overall polished demand it will indirectly impact trade liquidity resulting in price volatility. It is vital that rough diamond producers maintain price levels that ensure profitability and liquidity in the manufacturing sector during these uncertain times." He also reiterates the call for increased marketing spend by producers, "To ensure generic diamond engagement ring demand from U.S. millennial consumers." In short, it appears that the main and emerging markets should emerge intact.