Sell-offs in Chinese equities and bonds and widespread defaults in the country’s property market are driving wealthy investors to re-examine one of Asia’s most traditional forms of investment: jadeite.
A coup in Myanmar, US sanctions and the Covid-19 pandemic have all but frozen supplies of the uncut stone, sending prices of finished jewellery bearing jadeite soaring.
Myanmar produces 70 to 90 per cent of the world’s supply of high-quality jadeite, which is the rarer and more valuable of two chemically distinct stones collectively known as jade. The stone is overwhelmingly sold to buyers in China and south-east Asia.
“The production [of jadeite] is getting less and less,” said Tommy Chan, a Hong Kong business owner who recently started purchasing less expensive jadeite jewellery pieces worth HK$80,000 to HK$200,000 (US$10,200 to US$25,500). “The value of jadeite will definitely go up.”
China’s equity indices have taken a hammering this year as traders fretted over the country’s strict adherence to its zero-Covid policy and a spat between regulators in Beijing and the US. The country’s benchmark CSI 300 is down more than 15 per cent year to date, while Hong Kong’s Hang Seng index has shed 13 per cent.
China’s corporate bond market has also been rocked by a wave of defaults in the property sector, while house prices, a driver of wealth for decades, have declined for 10 straight months after policymakers last year sought to limit debt levels at developers and restrict mortgage lending.
“Investors have to consider how to diversify,” said Will Wang, head of client solutions and Asia strategic partnerships at VP Wealth Management, the Hong Kong unit of the Liechtenstein-based private bank. “Many investors will see jade and jadeite . . . as part of their asset allocation.”