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Chinese investors ditch property for jade in search of higher returns

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Wealthy investors are revisiting one of Asia’s most traditional forms of investment, jadeite, as China’s stocks and bonds plunge and widespread defaults in the country’s property market.

The coup in Myanmar, U.S. sanctions and the Covid-19 pandemic have all but frozen the supply of rough and sent the prices of finished jewelery, including jadeite, skyrocketing.

Myanmar produces 70-90% Among the two chemically distinct stones collectively known as jadeite, it represents a worldwide supply of high-quality jadeite of great rarity and value. This stone is overwhelmingly sold to Chinese and Southeast Asian buyers.

“production [of jadeite] Hong Kong business owner Tommy Chan recently started buying cheaper jadeite jewelry worth HK$80,000 to HK$200,000 (US$10,200 to US$25,500). “The value of jadeite will definitely go up.”

China stock index hit Traders have been frustrated this year by the country’s strict adherence to its zero-coronavirus policy and squabbles between regulators in Beijing and the United States. The country’s benchmark CSI 300 has fallen more than 15% year-to-date, while Hong Kong’s Hang Seng Index has fallen 13%.

China’s corporate bond market rocked by the wave of default In the real estate sector, home prices, a driver of wealth for decades, fell for the 10th straight month after policymakers tried to limit developer debt levels and limit mortgage lending last year. fell.

Will Wang, Head of Client Solutions and Asia Strategic Partnerships, Vice President of Wealth Management, Hong Kong Division of Liechtenstein-based Private Bank, said: “Investors need to consider ways to diversify. “Many investors will look at jade and jadeite…as part of an asset allocation.”

Jade carved in a workshop at the Mandalay Jade Market in Myanmar. Chinese buyers often pass on the finest jadeite from generation to generation, keeping a tight supply of the highest quality jadeite © Taylor Weidman/Bloomberg

Meanwhile, new concerns about global trends such as rapid inflation and the potential impact of Western sanctions on countries such as China after the war in Ukraine have prompted investors to turn green as an alternative safe haven asset. More and more people are investing in stones and other fine jewelry.

Darryl Ho, senior investment strategist at Singapore bank DBS, said Western sanctions against Russia have made “bearer assets” more attractive to investors, who can hold them as individuals without relying on third parties such as banks. Stated.

Regarding sanctions against Russia, he said, “We’ve seen people lose half their net worth with just the stroke of a pen.

Jadeite’s rough, reptilian appearance and the market’s reliance on face-to-face auctions make it nearly impossible for beginners to choose a quality stone, but investors are buying finished jewelry as a substitute. said Kitty Chan, director of the Hong Kong Stock Exchange. Jewelry and Jade Manufacturers Association.

In December, the 2021 China Jadeite Industry Consumption White Paper found that jadeite and jewelry became the favorite collectibles of Chinese luxury investors, ahead of watches, luxury cars, fine wines and paintings, with 27% buying works. presumed to be interested in

Chan, who is also sales director at Sheentiff Jewelery, added that buyers are buying mid-end pieces that were not traditionally considered investment quality.

Visitors looking at jadeite at the Mandalay jade market
Jade market in Mandalay. Shipments of finished jewelry containing jadeite are more accessible to novice investors and are booming © Taylor Weidman/Bloomberg

Myanmar’s coup last February and ensuing civil war cut off already limited supplies of jadeite. U.S. sanctions against a series of military-linked jade entities in Myanmar, including its chief laissez-faire and regulator, Myanmar Gem Corporation, have further squeezed supplies.

“In the 1990s and 2000s, when you go to the jadeite market and resell your work, pretty much…the best you can do is 1.5x or 2x. [in price]added Chan. “But now if you get a good piece, the price can be ten times that.”

Shipments of jewelery containing pearls, precious and semi-precious stones from Hong Kong, one of the world’s most important hubs for high-quality lab-certified jadeite, surged by more than 100% in value last year.

Calvin Law, a Hong Kong investor who launched the Legacy Jewelery Fund, an investment fund, in May said, “As we sit here during this time of the ongoing coronavirus outbreak, There’s so much cash on hand that people are trying to find something to do with it,” he added.

Vicky Sek, chairman of Christie’s Jewelery Asia, sold a jadeite bead necklace for more than HK$69 million in May. demand from young buyers and investors.

Sek added that Chinese buyers investing in high-end jadeite often pass it down through generations, limiting the supply of the finest jadeite. “Top quality never comes cheap,” she said.

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