Rapaport Magazine


Hong Kong July Market Report

By Liana Cafolla

Despite a successful Hong Kong jewelry auction by Christie’s in late May, diamond dealers are less than enthused about the current local market. While lavish spending on big-ticket items was in evidence at Christie’s, diamonds in the rest of the market reportedly are not selling as well.

“Business is down by 70 percent from 2011,” said Ashit Shah of diamond wholesale company Diasqua. “The price points are the same as a year ago.”

Fancy colors are faring better. Eliad Cohen, manager of Novel Collection, a manufacturer that specializes in fancy color diamonds, said he has not seen a difference in business compared with six months or even a year ago. “For fancy colors and for some special white stones — especially fancy shapes in sizes of 3 carats plus in SI to VS — I think for that kind of item, there is demand on a sporadic basis, for special occasions,” he said.

Nonetheless, Cohen noted a widespread softening of the market. “Generalizing, there is a kind of slowdown, with people waiting to see what will happen with the prices because they are thinking the current prices are a bit high.”


Cohen attributed the slowdown in part to the strong competition retailers face from online sellers such as Blue Nile. Customers are using their iPhones to instantly compare the prices quoted by retailers to those available online, and are frequently finding that the online prices are cheaper. “We see more and more people buying online 30-point, 50-point and 1-carat round stones,” he said. “All these goods, as far as I can see for the moment, have slowed because retailers aren’t interested in selling them if they don’t make money on the sale.”

Jewelry retailers are not only losing sales for these stones, said Cohen, but also risk losing customers, who are irritated to perceive that they are being asked to pay higher prices by brick-and-mortar dealers than what they can find online. As a result, retailers are not pushing these goods as they once did. Even domestic Chinese customers are increasingly favoring internet websites, according to Cohen, and are using several Mainland-based sites.

Those in the trade appear to be more concerned than the average Hong Kong diamond consumer about the potential impact of the euro crisis and slowing global economic growth. “People get panicked” when they hear all the news about the euro crisis, said Shah. “Even if they don’t understand everything they’re hearing, they worry it will affect China.”

The fall in the value of the rupee in recent weeks also is discouraging Indian buyers from making purchases, adding to the slowdown.


In a further reflection of unsettled global markets, Graff Diamonds cited “adverse market conditions” in canceling its planned initial public offering (IPO) in Hong Kong, which would have been Asia’s biggest IPO so far this year. The IPO was expected to raise $1 billion, giving the company a capitalization of $3 billion to $4 billion. But two days before the planned launch date, it had received orders for just half of that.

In Hong Kong, the cancellation was widely seen as a sign of continued investor skepticism about IPOs. Graff’s was the fourth major IPO to be called off in Asia in a single week. Several analysts already had questioned the high value placed on the company, pointing to the slowdown in China’s spending on luxury items. Others said the disappointing launch of Facebook a few weeks earlier, and the subsequent decline of its shares by about 25 percent, also may have dampened investor enthusiasm.

Graff  reportedly had planned to spend approximately half of the IPO capital on buying out the personal holdings of its  founder and major shareholder, Laurence Graff, including diamond inventory, a retail store and a polishing unit.


On a brighter note, Sotheby’s Diamond Salon opened in May, showing a small but scintillating collection of jewelry designed by Steinmetz Diamond Group, the auction house’s London-based design partner. The salon is located inside the new Sotheby’s art gallery space in the prestigious and centrally located Pacific Place shopping mall.

The contemporary designs — bearing the brand name Sotheby’s Diamonds — feature large stones and unusual combinations of materials, such as a bracelet made of rubber and diamonds, and a quirky series of wood and diamond tree-shaped brooches. The pieces are sold direct to the clients without the buyers’ premiums charged at the company’s Hong Kong auctions. Several items from the collection, including some of the wood and diamond brooches, sold out in the first weeks after the opening.

“The earrings are very popular,” said Lisa Chow of Sotheby’s Diamonds, who added that the salon is not only popular with Mainland Chinese buyers, as was expected, but also with customers from Singapore and Indonesia.



  • 1-carat to 2-carat diamonds are selling well in D to G colors in VS to SI.

  • There is occasional demand for larger round stones above 1.70 carats up to 3.80 carats.

  • Demand for fancy color diamonds in 3 carat and above, SI to VS, remains steady.

Article from the Rapaport Magazine - July 2012. To subscribe click here.

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