Is Chinese Art the New Hedge?

Auction Surpasses Expectations, Stabilizes, Poised to Grow

Yue Minjun, Hats Series, Armed Forces

SOLD THIS WEEKEND: Yue Minjun, Hats Series, Armed Forces

As previously discussed, recent developments have shown that contemporary Chinese art continues to show enduring strength despite an overall weakness in the global art market. As I wrote on Saturday, this weekend’s auction of Southeast Asian art in Hong Kong was a bit of a disappointment, but all eyes were on Sunday’s auction of fine wines and Asian art — which included a mix of modernist and contemporary Chinese works by artists like Lin Fengmian, Zhu Yuanzhi, Huang Yongping, and Sui Jianguo. Unlike the Southeast Asian auction, Sunday’s results most certainly did not disappoint. Showing their resiliance amid a global financial slump, Chinese works destroyed expectations and records alike, bringing in over $20 million. And, as many observers have noted, competition for Chinese pieces was stiff, particularly from buyers from mainland China.

As I wrote last week, as contemporary Chinese art is increasingly snatched up by mainland Chinese buyers and collectors driven equally by the long-term viability of the artwork and national pride, values should not only stay steady, but should show sustainable growth, in line with and actually going against inflation. As such, contemporary Chinese art is showing significant investment value. According to Reuters,

[D]ealers [at the Sotheby’s auction] said demand for premium lots was stronger, especially from mainland Chinese buyers.

“A lot of people were bidding like crazy,” said Hugh Moss, a veteran collector and dealer of Chinese art and ceramics who attended the Sotheby’s sales: “It goes against all recent trends,” added Moss who bid, but failed to buy three paintings.

In the sale of Chinese contemporary art, which has cooled noticeably since a pre-crisis boom…a couple of Chinese artists, including Huang Yongping and Sui Jianguo, did break world auction records for their works, Sotheby’s said.

The “cooling” described by Reuters here is what I would describe as going through a correction phase, becoming what Wang Jie, chief representative in Shanghai for Sotheby’s, called “rational.” Clearly, with the buying frenzy seen in Hong Kong from mainland bidders, as well as the increase in purchasing of contemporary Chinese art by major museums around the world, serious art collectors need to re-evaluate their collecting strategy.

Ai Weiwei, Bowl of Pearls (Set of Two)

SOLD THIS WEEKEND: Ai Weiwei, Bowl of Pearls (Set of Two)

Indeed, works by “modernist” Chinese artists like Lin Fengmian, the French-educated Chinese painter who was persecuted during the Cultural Revolution and died in Hong Kong in 1991, crushed previous records, with Lin’s work alone making up five of the top ten works sold in Hong Kong, the recent superstars of contemporary Chinese art, Zhang Xiaogang and Yue Minjun, had strong showings:

In total, 74 percent of the [contemporary] lots sold, a respectable showing in the credit-crunch era. The top lot was an untitled painting by Zhang Xiaogang, which sold for HK$4,820,000 (est. $HK4–5.5 million). Second was Hat Series — Armed Forces by Yue Minjun, at HK$4,580,000 (est. HK$3.5–5.5 million). Yue remains an auction favorite, and his Archeology was snapped up for HK$2,060,000, nearly tripling its high estimate of HK$700,000.

Although it is not entirely surprising that Zhang and Yue had such strong showings, based on other recent sales of their works, the Hong Kong auction is notable for the “up-and-comers” who set records, namely Huang Yongping and Sui Jianguo (also famous in their own right, but not quite household names):

Records were…set for Chinese artists. Sixty-Year Cycle Chariot, a conceptual piece by Huang Yongping, brought in HK$3,380,000, more than double its high estimate of HK$1.5 million. Legacy Mantle, a rusty, roughly 10-foot-tall iron sculpture of a Mao jacket by Sui Jianguo, sold for a solid HK$3,140,000 (est. HK$2.5–3.5 million).

Given the economic circumstances in which this sale took place, and the cynical attitude held by some observers of the Chinese art world about the future value of contemporary Chinese works, some of whom feel the market is showing some signs of “eroding” or diminishing, I feel that Sotheby’s Hong Kong sale was a success — and not just because they managed to sell 100% of the fine wine up for auction. Despite all odds, 79% of the contemporary work up for auction sold, and not just that of the superstars. Pieces by less popular — yet still famous — artists like Ai Weiwei (okay, we can call him infamous), also did well:

Two bowls, each nearly a meter in diameter and filled with clear-water pearls, by Chinese artist Ai Weiwei fetched HK$1.7 million, against a presale top estimate of HK$1.2 million.

All in all, I feel that this sale demonstrates that even in a rough economic climate, Chinese art has stabilized in value — off from its peak, to be sure — but the exuberance of the mostly-Asian bidders in the crowd and the Westerners on the phones says to me that Chinese art is becoming a true diversifier in western markets (and increasingly a centerpiece in mainland Chinese collections). Although the values have stabilized somewhat, the results of this weekend’s auction indicate (to me, at least) that we can see the contemporary Chinese art market in many ways parallelling the upticks in the Chinese stock market, economy, business markets etc.

Have We Already Seen the Chinese Art Market Bottom Out?

The Shanghai Stock Exchange: Have We Already Seen the Chinese Art Market Bottom Out and Head Back Upward, Following the Stock Market?

So, once again, in a long-winded way, I get back to the question I ask myself constantly: Is Chinese art the new ‘hedge’? If we keep seeing the value of contemporary Chinese art pacing the Chinese economy itself, I think the answer is a tentative but confident yes.

2 responses to “Is Chinese Art the New Hedge?

  1. Pingback: Chinese Art — The Scarcity And Valuation Connection « ChinaLuxCultureBiz

  2. Pingback: Buying Opportunities in Contemporary Chinese Art: It’s Now in the East! « ChinaLuxCultureBiz

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