Healthy art mar­ket ab­sorbs stock shock

Cul­tural mar­ket­place not only can weather the re­cent share price tur­moil, the forecast is for solid growth, ex­perts tell

China Daily (Canada) - - ANALYSIS -

Ge­orge Wong has been a col­lec­tor for many years. The real es­tate mogul, who is in his 60s and whose net worth is about $1 bil­lion, has gone from amass­ing al­bums and stamps as a youth to be­com­ing a pa­tron of the arts in the Asia-Pa­cific.

“I buy fa­mous artists’ works,” he said. “I have Monet, Pi­casso, Licht­en­stein and De­gas. But I’d like to own a de­cent-sized Monet.”

A big­ger Monet, per­haps a paint­ing of a waterlily? “Yes,” he replied. “I would like a waterlily.”

There is a shelf of Star Wars mem­o­ra­bilia in Wong’s Bei­jing of­fice and a me­tal­lic, bub­ble gum-pink ma­chine gun on the wall be­hind his desk. “I like art­work. I started small, just col­lect­ing, col­lect­ing any­thing. It doesn’t mat­ter if you buy art for in­vest­ment, to ap­pre­ci­ate it or to show off. As long as you’re in­volved.”

China is deeply in­volved in art, to the ex­tent that it is a reg­u­lar fix­ture in the world’s top three art mar­kets in terms of value.

Its co­hort of bil­lion­aires and their spend­ing sprees is leg­endary, in­clud­ing $116 mil­lion dropped in one night at one auc­tion on three paint­ings in May.

How in­volved they are dur­ing auc­tion sea­son, which be­gins this month and ends in Novem­ber, re­mains to be seen. China’s stock mar­ket rout, which started in mid-June and has spi­raled down­ward since, has hit the coun­try’s su­per­rich.

On July 8, Forbes said the 205 Chi­nese bil­lion­aires tracked by its Real-time Bil­lion­aires List had lost a to­tal of $195 bil­lion since the Shang­hai Com­pos­ite In­dex hit its peak on June 12.

In­ter­net ser­vices gi­ant Ten­cent’s stock, traded in Hong Kong, dropped 13 per­cent on July 8 and its chair­man, Pony Ma, lost $1.2 bil­lion on a sin­gle day. The list’s big­gest loser, said Forbes, was the cop­per and ca­ble en­tre­pre­neur Wang Wenyin, who lost $7.3 bil­lion in the past month.

China’s rich­est man, Wang Jian­lin, head of real es­tate gi­ant Dalian Wanda, lost $6.5 bil­lion in the past month, Forbes said, adding that he was still worth $32.3 bil­lion and re­mained as Asia’s rich­est man. He was one of the three deep-pock­eted Chi­nese col­lec­tors that night in May. He spent $20.4 mil­lion on Monet’s Le Bassin Aux Nym­pheas, Les Rosiers.

In­ter­na­tional auc­tion houses are con­fi­dent that China is ca­pa­ble of weath­er­ing the storm be­cause it has enough wealth — and enough wealthy col­lec­tors — to ab­sorb fi­nan­cial shocks.

Pres­i­dent of Christie’s China, Cai Jin­qing, said: “Like any mar­ket there are cy­cles and fluc­tu­a­tions. This is one of those things. Our strat­egy is geared to­ward the long term. We have to adapt.”

She said Chi­nese buy­ers in­creased their spend­ing on global art by 47 per­cent in the first half of this year. Asian buy­ers ac­counted for three of the top five works sold at Sotheby’s New York Im­pres­sion­ist and Mod­ern Art Evening Sale in May and 30 per­cent of that evening’s sales.

“China is an im­por­tant con­sumer of art,” said Colin Sheaf, chair­man of Bon­hams UK and Bon­hams Asia.

“At the mo­ment the fo­cus is very much on Chi­nese art, though I think we can ex­pect to see some diver­si­fi­ca­tion as some col­lec­tors — es­pe­cially of mod­ern and con­tem­po­rary art — broaden the scope of their in­ter­ests to in­clude works by some of the Western con­tem­po­rary mas­ters. Even if mid­dlerange buy­ers in China be­come less ac­tive for a while, Bon­hams has clients around the world who we are con­fi­dent will con­tinue to bid.”

A July re­port from Art­net said the mar­ket for Chi­nese fine art, not in­clud­ing for­eign art, con­tracted by 30 per­cent. Sales in China, in­clud­ing Hong Kong, for the first six months amounted to $1.5 bil­lion. For the first six months of 2014, sales were $2.2 bil­lion. This could be linked to a slow­down in China’s gift­ing cul­ture, ex­perts say.

Giv­ing art as gifts — known in China as el­e­gant bribery — has been part of the do­mes­tic art mar­ket for decades, but it has de­clined due to the gov­ern­ment’s on­go­ing anti-cor­rup­tion cam­paign.

As a side note, Art­net also re­ported lower sales in other im­por­tant art mar­kets: France, Ger­many and the United King­dom. Only the United States ex­pe­ri­enced a sig­nif­i­cant in­crease.

In 2003, sales at Christie’s Hong Kong were $98 mil­lion. By 2011, they had reached $836 mil­lion, said Dan Scott and Marc Hafliger, in­vest­ment strate­gists at Credit Suisse and au­thors of the Art­net re­port.

“We re­ally see China as an emerg­ing mar­ket,” said Christie’s Cai who, like other in­dus­try ex­perts, be­lieves the Chi­nese art mar­ket is a work in progress.

“China has a long history of art cre­ation and art col­lec­tion. It is part of world civ­i­liza­tion. The Chi­nese art mar­ket only re­ally started in the 1990s. The first Chi­nese auc­tion house was only founded in 1994. That was the start­ing point. … It is a ris­ing gi­ant and the fu­ture will see con­tin­ued growth.”

China also presents a chance to in­no­vate and experiment. “The China mar­ket is more will­ing to ex­pe­ri­ence new things in terms of col­lec­tors and artists,” she said. “They want to know more about art and they want to ex­pe­ri­ence it in a new way. … There is an emerg­ing gen­er­a­tion of very ac­tive fe­male col­lec­tors in China. It’s not as sim­ple as say­ing young peo­ple are buy­ing young art. They are in­ter­ested in spe­cial prove­nance and the in­ter­est­ing story be­hind it, if the piece be­longed to an in­ter­est­ing col­lec­tor.”

To this end auc­tion houses are woo­ing Chi­nese buy­ers through ex­pe­ri­ences rather than cat­a­logues alone. These ini­tia­tives also nur­ture allegiances and re­la­tion­ships with Chi­nese col­lec­tors who might oth­er­wise be drawn to the two do­mes­tic auc­tion be­he­moths, Poly and Guardian, a force in Chi­nese clas­si­cal and con­tem­po­rary art.

In May last year, Christie’s in­vited 18 new Chi­nese col­lec­tors to New York. The itin­er­ary in­cluded a guided tour to the city’s Mu­seum of Mod­ern Art and VIP tick­ets to an art fair.

“The Chi­nese want to un­der­stand a spe­cific piece of art and its value. They are get­ting more so­phis­ti­cated. They want ex­changes and in­ter­ac­tion with the out­side world,” said Cai.

There are par­al­lels be­tween China’s lux­ury mar­ket and its art mar­ket. Both have ex­pe­ri­enced strato­spheric growth over a short pe­riod of time and a lull in ac­tiv­ity does not nec­es­sar­ily point to an im­pend­ing col­lapse or a loss of in­ter­est. “As the Chi­nese mar­ket has be­come more ma­ture, col­lec­tors have re­fined their tastes and are now more dis­cern­ing about what they want to buy and how much they are pre­pared to pay for them,” said Sheaf at Bon­hams.

“This is nor­mal with any ma­tur­ing mar­ket.” Larry Warsh, a New York-based art col­lec­tor and pub­lisher with a spe­cific fo­cus on Chi­nese con­tem­po­rary art, warned against ghet­toiz­ing the Chi­nese art mar­ket, say­ing it is like any other.

“The fi­nan­cial cri­sis in gen­eral works both ways. It’s not China spe­cific. If you look at Dow drops in the past 10 or 15 years, the art mar­ket booms when the stock mar­ket is down. It cre­ates a sense of in­se­cu­rity and it cre­ates a safe haven for com­modi­ties like gold and art. It also makes peo­ple need to sell quicker. Art is a great way to hold on to as­sets.”

He re­jected the idea that the coun­try’s fi­nan­cial prob­lems will cause the Chi­nese to flee the art mar­ket and cause it to crash just as the Ja­panese did more than 25 years ago, when Ja­panese col­lec­tors smashed records at auc­tions and then ex­ited the art mar­ket when their econ­omy im­ploded. The art mar­ket is big­ger than it was in 1990, he ar­gued, and there is more money in a greater num­ber of re­gions.

“Ja­pan doesn’t have the scale of the Chi­nese art mar­ket, but there was a lot of bad buy­ing in the ’80s. Wealth will sup­port the Chi­nese art mar­ket and there is enough wealth to sup­port the art avail­able.”

Con­tact the writer at riazat@chi­nadaily.com.cn

PHOTOS PRO­VIDED TO CHINA DAILY

In­ter­na­tional auc­tion houses such as Christies, say their sales are at­tract­ing more Chi­nese buy­ers.

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