Berenberg upgrades Petra Diamonds after share price weakness

The bank, which still reckons that debt will consume much of the medium-term equity value unless rough diamond prices improve materially, said the full-year results were in line with its expectations, with the $246m impairment being the main outlier.

"While the impairment was disappointing, we think that the more cautious market backdrop that management is communicating was the driver of the weaker share performance on the day, with reports of a 4% softening in the market since the June quarter," it said.

"The rough diamond market does tend to give up some gains in the summer months, but this follows an unseasonal 5% drop in H1; not aiding sentiment as we move into year-end are continued trade tensions and protests in Hong Kong."

Berenberg said it has marked its model to market for a 4% price drop and forecasts flat prices for the next 18 months.

While it is more optimistic about the medium-term prospects of the diamond space, risk and sentiment remain skewed to the downside, it said.

At 1105 BST, the shares were down 3.5% at 7.86p.