RAPAPORT... The timing could not have been worse for this year’s Hong Kong Jewellery Fair. The opening coincided with the bottom falling out of global stock markets, fueled by the Lehman Brothers bankruptcy and the near-collapse of American International Group (AIG). And the fair’s closing came as the U.S. government proposed a vast bailout of the country’s battered, reeling financial system.
For the second consecutive year, while expansion work is underway at the Hong Kong Convention and Exhibition Center (HKCEC) in Wanchai, the fair was held at two venues on overlapping schedules: September 15 to 19 at the AsiaWorld-Expo (AWE) next to the Hong Kong International Airport and September 17 to 21 at the HKCEC.
Buyers had come prepared for weak market prospects for the rest of 2008, but they were stunned when the world’s stock markets reacted to the U.S. meltdown by proceeding to slide to all-time lows. Some diamond buyers simply stopped purchasing and window-shopped instead. Others took advantage of the situation and offered sellers very low prices.
While some diamond manufacturers did panic and sold off goods at bargain prices, others were confident that the situation was only temporary and would reverse itself. Rumors were rife that the price of diamonds would weaken, and that the Rapaport list would be lowered on Friday, September 19, making it a real “Black Friday.” Fortunately, the list remained unchanged.
In the midst of all this economic turmoil, diamantaires were saying that if diamonds are indeed to be a safe haven for money, they must maintain their value in difficult times, with a stable list and premiums and discounts finding their own level, depending on demand. There is a sense that if the prices drop in the list, many consumers will be anxious to sell back their diamonds into the market, causing a further weakness in prices and sending consumers to other vehicles to park their money.
Capitalizing on Market FearsThe Indian buyers at the shows are known to form huddles and exchange information among themselves on the best sources for their type of goods. They then go out in groups to try to wear down the sellers with low offers. If this does not succeed, the next wave of buyers from the group approaches the same sellers and improves on the offers — but always working within a predetermined level — until they get the stones.
This year, the demand was for smaller stones than usual. Stones larger than 3 carats were generally neglected, while 1 to 1.5 carats were being sought. There also seems to be a preference for pear shapes this year among buyers. Heart shapes also were sought after but emerald cuts, which were a hot item a year ago, were being ignored.
A few instances of diamonds being switched and stolen by gangs from Mainland China spooked some exhibitors so much that they were wary of any buyers from China and even turned them away, refusing to show them diamonds. The genuine buyers from China, however, were active at the show, reflecting an improvement in their market, which has been slow for months.
Trading Spaces
Work is proceeding on the HKCEC expansion and it is expected that more space will be available in time for the September 2009 show. But the show organizers announced they are moving loose diamonds, pearls and gemstones, as well as machinery for the jewelry trade, to the AWE. The announcement drew protests from exhibitors affected by the shift of venue, especially those who have been in the HKCEC for many years and who have been firm supporters of the show through both good and bad times.
Some diamond exhibitors even thought of starting their own show next year during the same period, to be held either in one of the hotels adjacent to the HKCEC or in a venue in the vicinity. That proposal was quickly abandoned as not economically viable and because of the nightmare of organizing a show to parallel the show in Wanchai.
The fair organizers have tried to justify the change of venue, saying it will give exhibitors the opportunity to expand the size of their present booths. They also said they will spend more to promote the show in 2009 and try to improve transportation to and from AWE. In a further attempt to smooth the ruffled feathers of exhibitors affected by the move, the organizers are offering a reduction of 25 percent in the price of the booths in AWE compared to a similar booth in the HKCEC. Even with the price concession, most exhibitors would prefer to remain at HKCEC as buyer traffic has been very slow at the AWE during the past two years, when the show was split between the two venues.
Some loose diamond exhibitors, however, said the move to the AWE might not be too bad, despite the inconvenient commute every day, providing all the diamond exhibitors are placed together in one large hall.
Article from the Rapaport Magazine - October 2008. To subscribe click here.