Green Wave

Something interesting is going on in the jadeite market. Sales exceeded estimates on many jade pieces at Sotheby's auction earlier this month, and there are stories of small jade pieces selling for profit a scant three weeks after the initial purchase.

Industry insiders point to increased demand from the mainland and a lack of supply as driving forces behind this phenomenon.

'Prices are moving upwards quite dramatically,' says K.Y. Luk, general manager of King Fook Jewellery Group. 'Demand from the mainland is growing tremendously with a result in demand outstripping supply.'

Supply is also a big issue affecting the price increases, according to Ngan Wai-ming, a consultant for the Hong Kong Jewellery and Jade Manufacturers Association.

'The shortage of jadeite roughs from Myanmar has driven up the prices of raw material as well as finished products,' says Ngan, who is also director of Wai Lun Jewellery.

However, the magic behind the numbers is in the way the industry prices jade.

'Since jadeite goods are sold with reference to the current material prices, the price difference between buying and selling realises profitable short-term investments,' Ngan says.

This is different from the diamond industry that traditionally has a six to eight week gap in pricing between the rough and polished diamond although, according to one insider, that gap is closing.

Jade is largely considered second only to diamonds as the most sought after precious jewellery in the Chinese consumer market. Luk says type 'A' jadeite, or natural jadeite, has genuine value for investment and is highly prized by collectors and jewellery lovers. Thus, as the mainland economy continues to prosper, demand for natural jade will grow.

'Prices on all precious materials for jewellery have increased, including gold and diamonds,' he says. 'The trend began quite some time ago and it is difficult to predict how long it is going to last.'

Those ready to ride the green wave, or even look on with appreciative envy, should educate themselves about the different types of jade available. Beware, there is only one true natural stone, called type 'A' jadeite. For investment purposes accept nothing less.

While the colour to buy should ultimately please you and is entirely subjective, there are a few fundamentals commonly found in top grade jade pieces.

Good jade is determined by its colour, transparency, clarity and volume. The best colour is translucent emerald green, but some buyers favour a rich apple-green tone. Undertones of grey or brown are not desirable. The lustre should look as if it is wet or oily. Some attractive colours may unfortunately look dull or dry. This is also undesirable.

'Any jadeite with good colour, volume, translucence and setting in good design can be a piece to show off,' Luk says.

A cabochon is a particularly desirable cut for jade jewellery. One showy example is Continental Diamond's jade ring with a flower motif. A large type 'A' jadeite cabochon surrounded by smaller round diamonds, handmade and set in 18kt white gold is offered with matching jade and diamond earrings.

Jade is a difficult product to understand for someone not steeped in thousands of years of Chinese history. Diamonds, with all their brilliance, and gold, with its weight as a commodity, are more common aspirational products. Yet, Asians have favoured jadeite jewellery for centuries. Collecting jadeite pieces is a deep-rooted practice in Chinese society, where it symbolises luck and wealth.

New investors should bear in mind that good pieces of jadeite are rare and share the same value as diamonds, Luk says.

'Solely available from Myanmar nowadays, jade is rarer than diamonds, that are available in several places around the world,' Ngan says.

Whether for investment or for a simple pleasure, remember that all genuine jade will be certified by an accredited testing laboratory. This could include the Hong Kong Jade and Stone Laboratory or any of the state-owned laboratories on the mainland. Make sure you see the certificate before you buy anything.