The Hong Kong Trade Development Council’s (HKTDC) Hong Kong International Jewellery Show, held March 4 though 8, was a resounding success. Already the second-largest jewelry show in Hong Kong, it is growing in both size and stature. For many exhibitors, especially those in diamonds, the business conducted at the 2011 show far exceeded past shows.
First of all, the traffic was excellent, with a big mix of buyers from various countries, signifying the maturity of the show and the recognition of its importance among buyers. While Indian buyers were, as always, the mainstay of the business, there was an increase in buyers from the Middle East and also Eastern Europe.
Second, the rise in the Rapaport list on February 25, the week before the show, added just the right amount of spice to the demand. The resistance to the new prices was short-lived, as action on the first show day was hectic.
Another incentive to first-day sales was that buyers knew that many of the observant Jewish diamond companies would be closed the next day for the Sabbath so they started their buying right away, because there is usually a shortage of diamonds in certain categories as the show moves into its final days. Business continued to be active from Sunday until the very end of the show.
Ten and Larger
Demand for large stones dominated, with stones 10 carats and up in big demand, primarily in medium or lower qualities. Large stones in D to F colors were passed over, except for VS to SI clarities. While there were clients looking for 5-carat sizes in DIF, they would not consider DIF in 6 carats to 9 carats, but jumped over those sizes to go directly to 10 carats and larger.
There is a definite trend to downgrade requirements, with buyers moving toward lower colors and clarities and shopping for goods in lower prices and with bigger discounts. While there are some buyers who still concentrate on the Triple EX goods, many have gone down-market, accepting stones with either a “Good” grade or fluorescence.
Some show attendees from the Southeast Asian markets had trouble adjusting to the new, higher prices being quoted at the show because the prevailing prices in their home markets before they left for the show were lower. Many decided to put off buying at the show and wait until their home markets felt the shortage and moved on to the new prices. Considering that prices are continually going up — and frequently — those markets will have to catch up on prices pretty soon, or be left out.
Up Again
Those who did buy during the show must have been smiling the week after the show closed because the Rapaport list went up again on March 11. The increases were pretty much across the board except for the 5-caraters and 10-caraters, which increased only in the DIF grade. Diamantaires expect that the 5-carat price list will be increased shortly, because the premiums are still pretty big for those stones.
Price hikes also are expected for the fancies, which did not go up in the recent lists but also have been selling well and command premiums in the larger sizes. Pear shapes are in good demand, especially in pairs, as are emerald cuts, cushions and heart shapes.
Demand from Mainland China is strong for G to M colors, mostly in VS to SI and in 10-pieces-per-carat up to 50 pointers and then in 1 carat and larger. There are always calls for special, larger stones of over 3 carats and it seems that there are open orders for DIF in 5 carats and also in 10 carats.
Continued Demand
Despite the Chinese government’s continuing attempt to cool the country’s economy with interest hikes, demand for diamonds is expected to remain strong because consumers are confident that the value of diamonds will keep on increasing. Wages in China have been going up in order to keep up with the rampant inflation, and widespread speculation in the country’s property and equity markets continues.
Prices for small sizes have been increasing steadily, especially in goods below sieve 3. Goods in these sizes that are manufactured in China are sold out for the rest of the year. These are pretty much sold off the wheel and, for certain qualities, most are presold.
All indicators point toward a busy market for the next few months, barring any unexpected turns in global economies. The world has seen how an earthquake, a disastrous tsunami and the potential of nuclear reactor meltdowns have pulled back an already struggling Japanese economy, which immediately affected all the world equity markets. Everyone is attached to this global spider’s web, where any break in any of the tendrils affects everyone else. There are still many things, either natural or manmade, that can unexpectedly change the course of action for all.
Hong Kong has a situation just across the border with mid-size Mainland Chinese banks, holding trillions of yuan in nonperforming loans, who will be looking for market capitalization in 2011 to build up their reserves. Will they find a solution or will it develop into a banking crisis?
The Marketplace
• 10-carats-and-larger is favored, enjoying very strong demand from many markets in the region.
• VS-SI are the main focus across the board, and Chinese buyers have switched to this range from the VVS goods they previously preferred.
• Carat sizes are moving well, but the shortage of VS-SI in this size is becoming more noticeable. There is little demand for VVS in high colors.
• Dossiers for 30-pointers and 50-pointers are still moving well.
• Uncertified goods from 25 pointers up to carat sizes in lower colors and clarities are becoming more popular as buyers look for cheaper price points.
Article from the Rapaport Magazine - April 2011. To subscribe click here.