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Hong Kong
By Mary Kavanagh
The downward spiral of retail sales in Hong Kong continued into May, with overall sales declining for the fifteenth consecutive month. According to government data, sales decreased 8.4 percent in value year on year and 9 percent in volume. Yet again, the category of jewelry, watches, clocks and valuable gifts was significantly impacted, recording a drop of 18.7 percent in value and 18.2 percent in volume, with sales registering their twenty-first consecutive month of decline. The government attributed the poor numbers to the slowdown in inbound tourism and local consumer spending. “The near-term outlook for retail sales is still subject to a large degree of uncertainty, depending on the performance of inbound tourism as well as the extent to which local consumption sentiment will be affected by the increased external headwinds and heightened financial market volatility,” a government spokesperson said. Tourist arrivals to the city in May were down 6.4 percent compared to the same period in 2015, a significantly greater decline than the 2.1 percent drop in April. Visitors from Mainland China decreased 8.3 percent in May compared to a decline of 4 percent in April. Thomson Cheng, chairman of the Hong Kong Retail Management Association (HKRMA) was disappointed with the May numbers and predicted a double-digit decline in the first half of this year, which would be the worst in over a decade, the South China Morning Post reported. He also said the adjustment period could last for another 18 months, with the first increase in sales coming around 2018. “Most of the member companies anticipate the retail sales performance would be further worsened in June, forecasting a double-digit decrease in June when compared with the same period in 2015,” HKRMA said in a statement.
So the glimmer of hope offered by the slightly better retail sales numbers reported in April — a decline of 7.5 percent, which was an improvement on the 9.8 percent decline in March — was dashed by the poorer-than-expected May figures. And analysts and industry veterans don’t appear positive about a recovery any time soon. The summer months are generally quiet for those in the diamond business. “Summertime is quiet almost every year in Hong Kong,” said Alon Garty of wholesaler Windiam Asia and retailer Van Eyck Fine Jewelry. Windiam specializes in fancy colors and shapes and larger stones. “In this market we move mostly unique stones for investment and special orders for large stones in fancy shapes and fancy colors,” he said. Vincent Yiu, of wholesaler and jewelry manufacturer Brilliant Trading Company Ltd. (BTC), reiterated that the summer months are generally quiet, both in Asia and Europe. “Factories in Asia, including our factories in China, and factories in Belgium and Russia and other European markets have summer school holidays starting early July until August…so now all traders have low expectations, but are hoping for a better last quarter of the year,” he said.
The June Hong Kong Jewellery & Gem Fair show was billed by the organizers, UBM, as being a one-stop-shop sourcing platform for the global jewelry trade. “The June fair was quiet overall,” Garty said, noting that there was some activity in the special stones in fancy colors, his area of specialty. News of the Brexit outcome came on the second morning of the show. “I don’t think Brexit will impact our industry in Asia, maybe in Europe,” Garty said. Yiu observed that it was difficult at that point to determine what it would mean for the European market and the Hong Kong local market, but noted that gold prices went up 8 percent and all currencies dropped against the U.S. dollar following the announcement.
The thirty-fourth edition of the September Hong Kong Jewellery & Gem Fair will take place at two venues in the city from September 13 to 19. The fair will kick off at the AsiaWorld-Expo venue, which will feature loose diamonds and gemstones, packaging and equipment, and continue at the Hong Kong Convention and Exhibition Center, which will feature fine finished jewelry. The fair is home to the world’s biggest Diamond Pavilion and Pearl Pavilion as well as Asia’s biggest Gemstone Pavilion. It remains to be seen if the world’s largest jewelry fair can rekindle hope for more prosperous times to come for Hong Kong’s diamond trade. “I guess the September fair will set the tone,” Garty said when asked if he thought the market in Hong Kong and Asia is picking up.Article from the Rapaport Magazine - August 2016. To subscribe click here.
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