x Abu Dhabi, UAEWednesday 24 January 2018

Rare pink diamonds rivalling gold’s reign on the throne

In China, not all that glitters is gold. Occasionally it is the sparkle of pink diamonds.

Two vendors adjust a display of jewels at the Hong Kong Jewellery and Gem Fair. Alex Ogle / AFP
Two vendors adjust a display of jewels at the Hong Kong Jewellery and Gem Fair. Alex Ogle / AFP

In China, not all that glitters is gold. Occasionally it is the sparkle of pink diamonds.

Between September 11 and last Tuesday, almost 52,000 buyers from around the world gathered in south China for the Hong Kong Jewellery & Gem Fair, the world’s number one fine jewellery event, with more than 3,500 exhibitors from around the world, displaying jewellery, pearls, diamonds and gemstones, as well as equipment and services.

The fair, which took place at both of Hong Kong’s major convention centres, showcased both raw and finished materials.

Among the sights at the fair was the world’s biggest diamond pavilion, spread over 16,000 square metres of exhibition space under the banner of the Antwerp World Diamond Centre and the Israel Diamond Institute.

Jewellery shops in Hong Kong are crowded with buyers from Mainland China.

There appears to be an outlet of the Chow Tai Fook Jewellery shop chain on every block in Tsim Sha Tsui in Hong Kong, and each one is thronged with buyers. A quick test of the accents you hear indicates they are from Mainland China.

Chinese investors look at diamonds and precious stones as an investment as the stock market is in the doldrums, the bond market is closed to retail investors and investing overseas is extremely difficult for Chinese people.

Hong Kong consumers have long valued jade and are currently buying jade necklaces, rings and bracelets as long-term investments.

They are also looking at jade because an austerity campaign by China’s president Xi Jinping that aims to keep a lid on extravagant official spending is giving the stone a boost, as jade is seen as less flashy than gold or diamonds, and less likely to attract attention.

At a Christie’s auction in May, a jadeite ring sold for about HK$20 million (Dh9.47m), or five times its estimated price.

Meanwhile, the jeweller Tiffany said last month that demand for gems in China had lifted its global sales in the latest quarter, leading the jeweller to raise its profit forecast for the year.

Earlier this month, a select group of about 100 hand-picked guests gathered in Hong Kong to see rare pink diamonds from Rio Tinto’s Argyle mine in north-west Australia. The 64 stones of this year’s tender have a combined weight of 54.99 carats.

Of the diamonds on display, 58 were pink diamonds, but three were blue diamonds and three were “Fancy Reds” , an extremely rare gem.

One of these was the biggest ever to be displayed at the tender.

The Argyle mine has only ever produced nine of the rare gems, including the three at this year’s tender.

The rarity of pink diamonds means they are worth 20 times the value of white diamonds. Argyle’s diamonds in the category sell for more than US$1 million per carat.

“It’s extraordinarily hard to put a price on [Fancy Reds] and, frankly, the imagination is the limit,” said Alan Davies, the chief executive of Rio Tinto’s diamonds and minerals division.

Rio Tinto believes the United States will remain its key market for diamonds, but China’s burgeoning middle class is also making it an attractive place to sell.

“The Chinese market is about 5 per cent. We do expect, through the course of 2020, for that to be over 20 per cent,” said Mr Davies. “So there’s good growth there.”

The Argyle mine is renowned for its small volumes of rare pink diamonds, but the mine will also “help meet China’s growing demand for diamonds and will ensure the future supply of a diamond production profile that is uniquely placed to develop new types of jewellery for the Chinese market”, he said.

Rio Tinto plans to develop the diamond fashion jewellery market in China, and it is collaborating with local and international designers to help it to develop the market.

“My work with diamond fashion jewellery is an adventure, an exciting journey. Not only does it change my understanding of diamonds, [but] more importantly, it allows more people to experience my designs,” Fei Liu, a leading designer of bespoke jewellery, told Diamond World.

Rita Maltez, who works in Rio Tinto’s China office, said the initiative was aimed at bringing Chinese design innovation to life.

“The collections are stunning examples of what can be achieved when creative talents come together with a shared vision – in this case the vision to redefine jewellery for women across Greater China,” she said.

The increase in interest in jewellery and precious stones has come, to a certain extent, at the expense of gold. But it would be wrong to write off the gold metal this year.

China’s total gold consumption swelled by as much as 29 per cent to reach 1,000 tonnes, overtaking India to become the world’s largest gold consumer, according to the World Gold Council.

China and India together already account for more than half of the world’s gold demand, according to the council.

China’s consumption of gold in the first six months of the year surged by more than half, as sliding prices attracted buyers. In April, gold experienced its biggest two-day fall in 30 years.

China’s gold purchases in July were 70 per cent higher than the 75.8 tonnes in the same month last year, according to the official data from Hong Kong. Mainland China does not publish such data.

Gold prices have lost about a fifth of their value this year, after rising steadily for more than a decade, triggering a release of pent-up demand across the world, particularly in India and China.

In 2011, gold ingot vending machines – similar to that found in Abu Dhabi’s Emirates Palace – were introduced in Beijing. They dispense bars of up to 2.5kg, accept cash and credit cards and have been used on a trial basis at banks and private clubs.

The sector is also closely watched in China for evidence of price-fixing. Last month, China fined five domestic jewellers 10.1m yuan (Dh6m) for fixing their prices.

Next month, a rare, round blue diamond will go for auction in Hong Kong and Sotheby’s expects the 7.59-carat stone, about the size of a shirt button, to set a new record for price-per-carat at about US$19m.