Hong Kong Show Reveals Global Economic Concerns

Nearly 50,000 visitors attended the fair, 30 percent of them locals, 23 percent from China and 7 percent from India. Most of the offerings, 23 percent, were diamond and diamond jewelry, the most dominant product types.

The pre-show mood pessimism was deep enough that by the end of it traders felt that the show "was not that bad after all," as one described it. While expectations were too low, they are rooted in a somewhat realistic view. The global economy seems teetering and the outlook for luxury demand by consumers is therefore gloomy.

The goods sold at the show were manufactured from expensive rough diamonds and precious metals. The main issue was to sale loose diamonds and finished jewelry for less – yet to maintain a margin. That goal was achieved, though sometimes narrowly.

After their upward race in June and July, polished diamond prices had to cool, and buyers knew to apply pressure to get the lower prices they wanted. The price reductions varied, from a few percentage points to as much as 10 percent according to traders, depending on the item and the seller's need to generate a turnover.  

Now comes a bigger test. Traders fulfilling orders will need to replenish their stock. Some are hesitating, expecting further price declines. Others want to be ready for the upcoming November-December holiday season and stock up early. It remains to be seen how prices will respond to these demands

Further down the line, the test is consumers' interest in buying luxury items in general and diamond jewelry in particular. Broken down by region, the outlook is not altogether that bad. Jewelry sales in Japan are rising, making it the biggest pleasant surprise of the year. China keeps growing and India is expecting a good wedding season.

The U.S. and Europe, where most of the economic woes are experienced, are not expected to be major growth markets for diamond jewelry.