Market Report: Panmure Gordon analyst says diamonds could rediscover their sparkle

Petra Diamonds rose 1.75p to 78.75p

Recovery of 23 carat Pink Diamond at Williamson (Petra Diamonds)

You’d be hard pressed to find many mining analysts talking their own books in the current climate – most are urging clients to sell.

But Panmure Gordon scribbler Kieron Hodgson said that diamonds could rediscover their sparkle later this year, arguing that production cuts and increasing demand could provide “an inflection point” after an average 15 per cent fall for rough diamonds prices last year.

“Undoubtedly it will take time … but we believe exposure to an asset class not reliant on China for the majority of consumption is a good place to start,” said Mr Hodgson, who named five stocks to buy.

Petra Diamonds, which was relegated from the FTSE 250 in last month’s reshuffle, rose 1.75p to 78.75p as the analyst stuck to his buy tip with a lower but still bullish 112p target price. Gem Diamonds was 5.75p better off at 116p after being tipped to reach 181p, while on AIM, the analyst tipped DiamondCorp, unchanged at 6.25p, to hit 15.7p and ruby and emerald group Gemfields, 0.5p higher at 46.5p, to reach 64p, an improvement on its previous 60p target price.

Firestone Diamonds was unmoved at 18.75p despite being upgraded from hold to buy.

The FTSE 100, up 31.73 points to 5,960.97, rose for two days straight for the first time this year with no shockwaves from China, even though lower oil prices lingered.

Shareholders of Shire are coming round to its $32bn takeover of Baxalta, having for the past six months feared the deal could burn a hole in the Dublin-based drugmaker’s pocket. Shire rose 155p to 4,269p as Flemming Ornskov, its chief executive, who had predicted the company could make $500m a year in cost savings, revealed at the JP Morgan Healthcare Conference in San Francisco the company’s internal goals “are much higher”.

Jimmy Choo dipped 3.8p to 131.2p, as Barclays cut its rating on the luxury shoe-maker to equal weight, with China again highlighted as the reason.

The AIM-listed Stanley Gibbons slumped 9p to 59.5p, as it confirmed it is considering funding options, but claimed a share placing would be an “unattractive” route.