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Israel
By Avi Krawitz
The International Diamond Week, which took place during the first week of September, helped lift the mood in the Israel Diamond Exchange (IDE) as diamantaires returned from their summer vacations deeply concerned about the market. “The world is experiencing challenging times economically, and we in the diamond industry, who deal with a luxury item, are among the first to be hit,” said Shmuel Schnitzer, president of IDE. “This joint project of International Diamond Week reflects our determination to promote our business despite the difficulties.” The event was organized by IDE in cooperation with the Diamond Dealers Club (DDC) of New York, Antwerp’s Beurs voor Diamanthandel and Mumbai’s Bharat Diamond Bourse (BDB), with both buyers and exhibitors from those centers participating in the event. Dealers noted that trading was highly focused on the U.S. market with stable demand for commercial-quality SI1-to-I2 clarity goods and shortages of piqué goods requested by New York–based dealers. Yosef Asherian, president of Asherian Diamonds, a manufacturer of .50 carats and up in all shapes and makes, noted that the week was positive and sales were made even if business wasn’t booming. “More importantly, the atmosphere was good, both among Israelis and the overseas buyers,” he said. “When the market is weak, it’s important to improve the mood.”
Most dealers who spoke with Rapaport Magazine agreed that the event came at the right time given reports from the previous week that two Israeli companies had defaulted in payments estimated to exceed $20 million and were facing bankruptcy. Schnitzer estimated that more than 50 Israeli companies were affected by the defaults in some way. Schnitzer assured the trade that IDE’s management would take unprecedented measures against companies that violate the rules of the exchange and Israeli law. “We will take all the necessary steps to determine the exact causes of these defaults and the people involved in these acts,” Schnitzer stressed. He added that the defaults were part of an international wave of bankruptcies, which have affected all diamond centers, including India, the U.S., Dubai and China, and reflected the prevailing weak global environment.
Despite the positive reports from International Diamond Week, Israeli dealers believed that the market remains very challenging. Asherian noted that buyers are showing restraint and waiting for the market to improve before making larger inventory purchases. Nissim Zuaretez, chief executive officer (CEO) of D.N. Diamonds, a specialist supplier of large polished diamonds above 2 carats, agreed, adding that buyers are not willing to buy on the table, meaning, “They don’t buy what they don’t need for stock. But buyers who need the goods pay the price.” Zuaretez pointed out that demand for diamonds above 4 carats has been less affected by the slowdown in China than smaller goods under 1 carat. While he acknowledged that China’s wealthy are keeping a low profile — due to the government’s anticorruption campaign — Zuaretez suggested that the recent financial market slump could have an upside for the industry as people are now looking at diamonds as a more stable place than stocks to invest their money. Prices of large, high-end diamonds have also held relatively steady, as there are not a lot of new goods coming to the market due to the decline in production. Zuaretez reported that there is a shortage of nice goods in the market, while existing high inventory levels are predominantly of low-quality goods that are difficult to move. Reiterating what Schnitzer urged at the opening of diamond week, Zuaretez stressed that diamantaires have to be proactive. “The market is challenging but there is activity. You have to make things happen and you can’t just sit in your office waiting for things,” Zuaretez said. “If you have the right, nice goods at the right price, the market is active.”
Members of IDE met to discuss how new antimoney-laundering (AML) legislation will affect business in the bourse. The first part of the law, dealing with client identification, went into effect on September 15, according to the IDE website. From mid-October, IDE members will be subject to supervision of client identification by the office of the Diamond Controller. Shlomit Vagman-Ratner, acting director at the Israel Money Laundering and Terror Financing Prohibition Authority, said that representatives of the international Financial Action Task Force (FATF) will soon visit Israel to check on implementation of the law and that diamond companies will also be subject to spot checks. “Every IDE company must appoint a point person for implementing the law.”Article from the Rapaport Magazine - October 2015. To subscribe click here.
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