Oversupply an Issue at Hong Kong Show

RAPAPORT... Dealers at the Hong Kong International Diamond, Gem & Pearl Show expressedconcerns about sluggish polished demand and an oversupply of goods in the wholesalesegment.Inventory moved slowly despite busy traffic at the fair, which began this week, people who attended the event toldRapaport News. "The mood looks OK, but conversion [to sales] still hasn'thappened," said Rahul Jauhari, senior vice president of global sales andmarketing at India-based trading firm StarRays. "Not that we're not happy withthe...result, but it could be better." The exhibition still produced a better outcome than theSeptember 2018 show, when activity suffered as a result of a major typhoon andreligious holidays, Jauhari added. However, continuing challenges in India havedulled trading, he noted. A surplus of lower-value polished has spooked the market,with attendees bringing a large volume of goods to the exhibition. The numberof stones on the RapNet Show Listings service, an electronic catalog ofinventory, grew to a record 160,000 for the Hong Kong event, compared with theusual 100,000 to 130,000. Worries increased this week after more than 100,000 caratsof melee diamonds became available in Mumbai, driving prices of those goodsdown 30%, The Times of India reported Thursday. That was sparked by the offloading of goods by people connected to the late former chief minister of the Indian state of Tamil Nadu, Jayaram Jayalalithaa. In 2016, shortly before her death, she bought over 200,000 carats of goods in a size category known as +11 in the wake of the government's demonetization policy, the newspaper said. "That just made things a bit worse," Jauhari explained,noting that diamonds below a carat had already been in surplus in recent months."Psychologically [when an offloading event happens], retailers start thinking pricesare going down, so it indirectly affects other categories as well - they startasking for crazy prices in other categories as well." Demand for larger goods was slow, according to Dotan Meirov,chief operating officer at Israel-based MID House of Diamonds. He noted astrong volume of transactions, but mainly involving lower-value items. "The traffic is there and is good, but the numbers aren'textravagant," Meirov reported. "There seems to be a little hesitation onbig-ticket items." Weak prices and an oversupply in the under-1-carat range arecreating a degree of difficulty, despite some positivity, according to Vincent Yiu,director of Hong Kong's Brilliant Trading Company. The recent Chinese New Yearseason failed to boost the market significantly, as the US-China trade war and economicvolatility led to weak retail sales, and traditional jewelers lost business toe-commerce rivals, he noted. "Not enough buyers are willing to invest for stock," Yiuexplained. The fair, one of two parallel events, opened Tuesday at theAsiaWorld-Expo venue, and runs until Saturday. The Hong Kong InternationalJewellery Show, taking place at the Hong Kong Convention and Exhibition Centre,began Thursday, and ends Monday. "In the midst of the current economic instability, thesejewelry trade shows help brace the industry for the challenges ahead," saidBenjamin Chau, deputy executive director of the Hong Kong Trade DevelopmentCouncil, which organizes the fairs. Image: The Hong Kong International Jewellery Show, which began Thursday. (Hong Kong Trade Development Council)