The Chinese diamond industry is experiencing turbulent times. On January 31, 2014 the Hong Kong stock market crashed to its lowest level in seven months. This happened when the Hang Sung Index lost 2.9 percent. This lead to worry manufactures in the Chinese diamond industry. This was the single worst day of trading since 2008 for the Index. However, by mid-February, the stock market showed signs of improvement. With stocks rising benchmark index capping its biggest weekly gain in five months. The Hang Seng Index increased by 0.6 percent, the biggest increase since September. Companies such as Chow Tai Fook Jewellery and Luk Fook Holdings International Ltd. by 0.4 percent and 0.6 percent respectively. Managing director at Dehres Ltd., Ephraim Zion, a diamond jewelry manufacturing syndicate explains. "I think, generally speaking, this will be a quiet year, similar to 2013. I hope I am wrong, but that's my feeling. Since Chinese new year is getting a bit better, hopefully on the road to full activity." However, smaller Chinese diamond industry manufacturers are not enjoying the same net increases.
Hong Kong and the Chinese Diamond Industry
The Hong Kong Retail Managements Association reported data that retail sales in Hong Kong city grew 5.7 percent. Carolyn Mak, chairwoman of the Association was quoted as saying to the South China Morning Post, "it's very rarely does that. In 2012, it was an 8.8 percent increase." Mak noted that the single digit growth in sales peak holiday months 2013 such as October and December was significantly lower in sales that in previous years.
Sales of valuable gifts, such as jewelry diamonds and watches increased 24.8 percent during the year. However, December sales were disappointing.
And "only recorded a high single digit growth of 9.1 percent in sales value and a man double-digit growth of 15 percent in sales volume."
She goes on to say that the disappointing December sales were unacceptable. Especially for the Chinese diamond industry at a time when the calendar year reports a net increase in sales.
Slowdown in the Chinese Diamond Industry
The Chinese diamond industry is also experiencing a slowdown with regards to its wholesale diamond market.
Zion went on to say the Chinese diamond industry was experiencing a "sluggish" moments and noted that Hong Kong diamond traders have trimmed their stock and adopted a wait-and-see policy. The Eternity spokesperson went on to say "diamond wholesalers usually keep stock. During the past few years, when the interest rate was so low. Chinese diamond industry insiders took advantage of the low cost of capital to keep large stocks.
Now they are being cautious and we see what the US Federal Reserve is about to do," with respect to interest rates in capital supply. The Chinese diamond industry is tight with regards to liquidity. Especially in mainland China.
One Chinese diamond industry insider maintains that.
"The long Chinese New Year holidays brought business to a standstill." And he expected the market to pick back up once the period was over expecting, "the market kick start again. More financial data about the US global economies come to light then and would enable the diamond traders to plan ahead for the next few months."
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The Chinese Diamond Industry is experiencing a economic slowdown.