At a Sotheby’s auction Tuesday in Hong Kong, a mind-boggling 59.6 carat diamond – “Pink Star” – sold for US$71.2 million, a new world record for any diamond or jewel. The sale comes 3 years after the stone was sold at an even higher price at another Sotheby’s auction in Geneva. However, that deal later didn’t materialize after the buyer defaulted.

 

In November 2013 it was auctioned for a record US$83 million to New York diamond cutter Isaac Wolf, who failed to pay because his investors backed out. The auction house was then forced to buy the diamond itself because it had guaranteed a US$60 million sale price. The “Pink Star” was mined in Botswana, Africa, by De Beers in 1999 as a raw 132.5 carat gem.

The stone was then cut and polished over a two-year period by Steinmetz Diamonds, owned by Israeli billionaire Beny Steinmetz. Pink diamonds get their colour from a process known as plastic deformation. Later, Danish model Helena Christensen wore the diamond around her neck to exhibit it to the public for the first time in Monaco in 2003.

 

Until the successful sale of the “Pink Star”, the most expensive diamond ever sold at auction (Christie’s in Geneva) was the “Oppenheimer Blue,” which fetched 56.8 million Swiss francs (then US$57.6 million) last May. The previous world auction record for a pink diamond was US$46.2 million for the 24.78 carat “Graff Pink” in 2010.

Pink Star, the largest flawless fancy vivid pink diamond ever graded by the Gemological Institute of America, smashed the US$60 million pre-sale estimate set by Sotheby’s. The sparkling oval-cut rock measures 2.69 by 2.06 centimetres (1.06 by 0.81 inches) and weighs 11.92 grams (0.026 pounds).

 

Sotheby’s Asia Chairwoman Patti Wong said the winning bidder is Hong Kong jeweller Chow Tai Fook. She claimed that the company is not worried about another default because the bidders were vetted. Wong said – “We’re very, very confident that all three bidders had the financial capability, and of course the buyer definitely had the financial capability,”

It was reported that three telephone bidders competed for the stone during five tense minutes of bidding. Bidding started at around US$56 million. When it was finally sold for a hammer price of US$63 million (excluding the buyer’s premium), the crowd in the packed auction room erupted into applause.

 

Chow Tai Fook, founded in 1966, is the world’s largest jeweller, operating more than 2,000 jewellery and watch stores throughout mainland China. Besides jewellery, the Hong Kong conglomerate company also engaged in the property, development, hotel, casino, transportation, port and telecommunications businesses.

Wong said – “We’re very happy. I know there was a lot of talk about the economy in China not being as positive as it was a few years ago.” Calling it a historic sale, David Bennet, Sotheby’s worldwide chairman for international jewellery, said – “The Asian element in the jewellery market is extremely important and from what I’ve been hearing, they have become more and more important.”

 

It’s not hard to understand why Sotheby’s is so happy to finally able to sell the “Pink Star”. The diamond market as a whole has had a couple of wobbly years thanks to tumbling of oil prices. Sotheby’s tried but failed to sell for US$70 million the Lesedi la Rona, a 1,109-carat rough diamond, the second-largest rough diamond to be discovered in more than a century, in London last June.

Similarly in April 2016, the Shirley Temple, a polished blue diamond with Hollywood credentials thought to be worth US$35 million, also didn’t sell, and had momentarily “prompted gasps of shock in the Sotheby’s New York sales room.” Of course, it’s the Asians’ purchasing power that forced Sotheby’s to move the sale to Asia, instead of the traditional Geneva.

 

Rich Chinese have always had to grapple with the dilemma and challenge of where to store their wealth, faced with currency depreciation, an overvalued property market in many cities and a volatile stock market. In 2015, property tycoon Joseph Lau Luen Hung became the world’s greatest daddy when he splashed US$77 million on two pieces of rocks for his daughter.

First, he spent a cool US$28.5 million (£18.7 million; RM124.8 million) buying a rare 16.08-carat pink diamond – the largest of its kind to ever go under the hammer – from auction house Christie’s, which he renamed “Sweet Josephine”, after his 7-year-old daughter Josephine. But his shopping spree didn’t stop there.

 

The next day, the Hong Kong billionaire went to auction house Sotheby’s and bought another rock, another rare 12.03-carat “Blue Moon” diamond for a record US$48.5 million (£31.8 million; RM212.4 million) and immediately renamed it “Blue Moon of Josephine”. The lucky Josephine now owns two new precious toys worth US$77 million.

 

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April 5th, 2017 by financetwitter

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