The May 1 Labor Day holiday saw fewer-than-expected
big-spending shoppers, which some retailers attributed to the recent softening
in China’s economy.
“We have noticed that customers’ spending on high-priced
jewelry products has fallen, as some high-end shoppers now have a tighter
budget,” Ricky Ng Koon-keung, general manager of TSL Jewellery (HK), told the South
China Morning Post. Ng is expecting a falloff in growth of 30 percent to 40
percent compared with the numbers his company posted in 2011. He said demand
for products costing more than $13,000 is down in 2012. In contrast, sales of
more mass-market products, while they have slowed, remain steady, possibly
because middle-class consumers are less affected by China’s weakening economy.
Retail sales in the first quarter increased by 15.9 percent
in value and 10.7 percent in volume year to year but the seasonally adjusted
volume was down .9 percent from the previous quarter, according to figures from
Hong Kong’s Census and Statistics Department. Sales of jewelry, along with
watches, clocks and valuable gifts, were up 10.2 percent by volume in March
compared with a year earlier.
Sales growth is weaker largely because of China’s stalling
property prices and a lack of access to credit from banks in Mainland China. As
a result, Mainland Chinese tourists have less cash — the preferred method of
payment — in their hands, said Dominic Li of International Company, a diamond
retailer and wholesaler. “China is slower,” he said. “Business is very tough
“We are seeing a slower demand in May compared to the
previous month of April and compared to the same period in 2011,” said Alon
Garty of diamond wholesaler Windiam. “People are not buying in great volume for
their stock. China is still active — in less volume, but still active.” In
addition, he said that the wet season in Central Africa was creating a shortage
of gem-quality goods coming onto the market.
London-based jeweler Graff Diamonds plans to launch a $1
billion initial public offering (IPO) on June 7. It will start taking orders at
a road show scheduled for May 21, according to media reports. Graff currently
has one shop in Hong Kong, located in the prestigious Peninsula Hotel in
Kowloon, and plans to open a second shop in the city, in addition to outlets in
Macau and Hangzhou, in 2012.
According to a May 7 report in Thomson Reuters International
Financing Review, about 28 percent of Graff’s IPO proceeds will be used to buy
the inventory of DiamondWorks, a Luxembourg-based diamond wholesale company in
which Laurence Graff owns a stake, and 25 percent to buy the entire outstanding
share capital of Graff Monaco. The remainder will mainly be used to repay debt.
Goldman Sachs — one of four banks coordinating the IPO —
estimated that Graff’s profit will grow by an annualized 31 percent from 2011
to 2014. The bank compares that to 15.8 percent expected for Tiffany and 47
percent for Chow Tai Fook.
Chow Tai Fook, which raised $2 billion in its own IPO in
December 2011, held its first auction on April 30 in Hong Kong’s Grand Hyatt
Hotel. The centerpiece of the sale was “the galaxy” — an 18-carat white gold,
diamond and blue sapphire necklace that sold for $965,000 to a buyer from Beijing.
Reflecting the company’s focus on its fastest-growing market, the auction was
conducted in Putonghua, the language of Mainland China, rather than in Hong
Kong’s Cantonese dialect.
NEW DIAMOND VENUES
Flash sales website Twangoo.com, known mainly for selling
cut-price restaurant and spa deals, has started to sell discounted diamond
jewelry through its group-buying site. The 5C Group, an Antwerp-based diamond
manufacturer and wholesaler, offered either a thin line bracelet with a total
diamond weight of .50 carats, or a five-rondel necklace with a total diamond
weight of .70 carats, and priced each at approximately $640, which the company
said was a 50 percent discount off the original price.
At the high end, Sotheby’s opened a new 15,000-square-foot
gallery and diamond salon in Hong Kong on May 19. The space comprises the
entire fifth floor of One Pacific Place, a high-end retail and office building
near the city’s central district. Sotheby’s Diamonds, a partnership between the
company and the Steinmetz Diamond Group, will offer immediately available new
diamonds and diamond jewelry direct to clients, without the buyer’s premium
that is charged in auction sales. Patti Wong, chairman of Sotheby’s Asia and
Sotheby’s Diamonds, said the permanent diamond salon is opening “in response to
the strong following among Asian clients for the Sotheby’s Diamonds
- 50-carat to 3-carat diamonds in D to J, VS to SI, are
- Demand is high for fancy shapes.
- Demand is good for fancy colors, but high prices are
- Demand for -11 sizes is very weak.
- In retail, 1-carat stones are moving faster than 2 carats
to 3 carats, and are preferred in D to G color, triple EX with no fluorescence.
Article from the Rapaport Magazine - June 2012. To subscribe click here.