A giant 13.96-carat diamond will be auctioned in Shanghai on Sunday, tapping into the appetite of affluent Chinese for super-large precious stones.

The light greenish yellow diamond pendant has a reserve auction price of 2.99 million yuan (US$424,586), according to auction organizer 21Gem.

"If it were not for the financial crisis, we might not be throwing this big stone like a ping pong ball, into an auction in the Chinese market at such a low reserve price," Fan Qinfen, the chief operating officer of the Shanghai-based jeweler, told Shanghai Daily yesterday.

"China's economy is sound while the western markets are suffering recession jitters," she said. "We happened to find the supplier of the stone and managed to bring it to China."

The diamond, which is of VSI (very slightly included) clarity standard, comes from a European supplier. The diamond has been checked through customs with solid source and IGI certificates, Fan said. "To be frank, we haven't auctioned such a large stone before and we are also concerned about the credit crisis affecting the international economy. However a large stone such as this will be a hedge no matter what the economic conditions are," Fan said.

"We now focus on large stones whose prices do not fluctuate as much as small ones. Diamonds of less than one-carat lost value by up to 30 percent recently because of foreign exchange losses and price cuts."

21Gem will auction about 50 diamonds of more than two carats on Sunday and two-thirds of the stones are from up-stream suppliers.

The auction was planned a year ago, and is part of the four-day Shanghai jewelry show which ends on Sunday.

(Shanghai Daily November 25, 2008)