Retail sales across all products in Hong Kong took a major downturn in January 2020, falling by more than 21% and marking the12th consecutive month of falling sales. Earnings in the category jewelry, watches, clocks and other valuable gifts were hit the hardest, falling 42% year-on-year to US$632 million (HK$4.92 billion).
The Census and Statistics Department of the Hong Kong Gov't. noted the potential impact of the early date of the Lunar New Year and the outbreak of the coronavirus. Concerning the New Year, a government spokesperson said, "Local consumer spending normally attains a seasonal high before the festival. As the Lunar New Year fell on January 25 this year but on February 5 last year, the year-on-year comparison of the figures for January 2020 with those for January 2019 might have been affected by this factor to a certain extent. The spokesperson also pointed out that "the business environment of retail trade has turned even more austere lately, as the threat of COVID-19 has brought inbound tourism almost to a standstill and caused severe disruptions to consumption-related activities." Tourism was already suffering as a result of the demonstrations that have rocked Hong Kong and continued into the new year.
As a result, diamond jewelry sales in China, as well as the loose polished diamonds to create that jewelry, have collapsed since the outbreak of the virus as shoppers stay home. China’s economy is heading for a first-quarter contraction due to the virus outbreak as consumers stay home and factory output remains disrupted, Bloomberg News reported. The virus has also paralyzed the country's auto industry, with car sales having their biggest monthly plunge on record. It is clear that the slump in Chinese diamond demand will reverberate back to manufacturers, traders and ultimately the mining companies.