Tag Archives: hedge

Art Funds Feel A Revival As Global Economy Warms Up

More Fund Managers Eyeing Art Investments — But Will They Rely On The “Old Favorites” Or Buy Art From Emerging Art Powerhouses Like China?

 
Wang Jin, Knocking at the door, 1995 © Wang Jin

Wang Jin, Knocking at the door, 1995 © Wang Jin

The New York Times recently wrote on art funds becoming a popular option for investors looking to diversify their asset holdings as the global economic crisis eases and investors crave more diverse investment destinations. Art funds, which dipped in popularity as the crisis took hold, have actually increased in number over the years, with many focusing only on one type of art or period. As the author points out, individuals who had been burned by risky investments in the pre-recession years are again looking at art as a wise investment:

“The art market has taken in the corrections. People are confident at today’s price levels,” said Anders Petterson, founder of ArtTactic, a London-based art market research firm, in a comment posted on the company’s Web site. “We are reaching the bottom, assuming the stock market does not dip again.”

Reflecting the new hesitance to put money towards the great-risk-but-great-rewards-maybe investments of the world like real estate, art investment funds are now getting more creative. Some funds are going against the grain, putting money toward assets that are not expected to bring quick, huge returns yet are expected to appreciate over time and — perhaps most importantly — outpace inflation. Since massive global spending on stimulus packages and the like are expected to bring at least SOME measure of inflation into the picture, investors are looking at assets that will keep their money in check, and allow it to grow at a sustainable pace. Continue reading

The Global Yuan: What It Means For Chinese Assets

China’s Monetary Policies Look To Favor Yuan, Gold At Dollar’s Expense: What Will This Mean For Art Collectors & Investors In “Portable China”?

Art Collectors and other holders of "Portable China" can benefit from the globalization of the yuan if they're in it for the medium- to long term

Art Collectors and other holders of "Portable China" can benefit from the globalization of the yuan if they're in it for the medium- to long term

Today, Business Intelligence looks into China’s monetary policies, and how they are increasingly favoring alternate investment vehicles like gold while putting a dent in the US dollar. For investors looking to diversify their holdings into a number of areas to lower risk and exposure to market fluctuations, what will the simultaneous increase in asset diversification, global economic jitters, the ascendance of China and internationalization of its currency have on those who put their money into Chinese assets? The article does a fairly good job of illustrating the long-term effects these market forces will have on these investors as well as China itself:

In a series of recent policy moves and announcements through official channels, or increasingly through indirect ‘economic ambassador’ addressing conferences or talking to western reporters, China’s intentions and ambitions are becoming clearer.

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Chinese Art Collectors Buying In NYC, Expect Trend To Continue In HK Auctions

New York Auction Of Ancient Chinese Antiquities Draws Fevered Bidding, High Proportion of Mainland Chinese Collectors

The rising influence and enthusiasm of mainland Chinese art collectors is a subject we revisit very often, because the long-term implications of a strong domestic collector class could be huge for owners (or potential buyers) of Chinese art of all classes — from antiquities to contemporary Chinese art. At this week’s auction of Chinese antiquities from the Sackler collection, which brought in $3,285,875 — triple the low estimate — and was 97% sold by lot (99% sold by value), all of the elements that we feel will completely reshape the Chinese art world over time — mainland collectors and intense competition for scarce pieces from historical artists or rare antiquities — came to the forefront. This chart from Art Market Monitor speaks for itself:

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While the huge gap between the estimates and realized prices is noteworthy, as it indicates strong bidding, what I feel is most important about this chart (and, to be more specific, the results as a whole) is the overwhelming proportion of Asian buyers. While, as usual, this chart does not specify the buyers’ countries of origin, from other reports (and previous trends) we can be fairly confident that these buyers are primarily mainland Chinese. With 80% (or, at least, most of that 80%) being Chinese, and the highest bidder at the auction being a private buyer, these auctions give us a good sense of the possible future of Chinese arts auctions.

Up for auction in Hong Kong on October 6: Ai Weiwei's “A Gift from Beijing (set of three works)”

Up for auction in Hong Kong on October 6: Ai Weiwei's “A Gift from Beijing (set of three works)” -- Estimate: US$ 30,800-44,800 (HK$ 240,000-350,000)

With upcoming auctions like Sotheby’s Autumn auction in Hong Kong on October 6 expected to draw a similar high proportion of Chinese buyers, it appears the era of the Chinese art collector is ramping up. While they are still a relatively small group (based on population and compared to the number of western collectors), over the past few years Chinese buyers have indicated that they are often willing to spend whatever it takes to get a piece of art that means something to them — whether on a personal or patriotic level. A good example of this was yesterday’s sale of an imperial desk set, which belonged to the Qing Dynasty emperor Qianlong — who remains a popular figure in Chinese history. As Art Market Monitor reported today, this desk set brought in $1.4 million — over an estimate of only $30,000. I would have loved to be in that room when bidding was going on.

(Via Art Market Monitor)

(Via Art Market Monitor)

Another piece of good news in the Asian art world comes from Sotheby’s this week, as their vice chairman of Asian Art, Henry Howard-Sneyd, said ahead of today’s sales of Chinese and other Asian art, “We’re aiming as high as we can.” As Reuters notes, Sotheby’s is confident that the art market in Asia is in a good place right now, as evidenced by recent sales and trends that suggest a resistance to the global economic woes that are keeping many western art buyers indoors at the moment:

A rare mother-of pearl inlaid black lacquer wine table, dating to the Wanli Period (1573-1620) that once belonged to Mrs. Nelson Rockefeller, is expected to be among the top selling items in one of two Chinese works of art auctions on Wednesday. It could fetch up to $600,000.

Also included in the sale is a pale celadon jade carved brushpot, Bitong, dating to the 18th century that could sell for as much $400,000, and a large bronze figure of an 11-headed and multi-armed Avalokitesvara, one of the most important Buddhist deities, with an estimated price tag of $200,000.

“We see the price and interest in Asia art going higher and higher,” Howard-Sneyd added.

Forty lots of Chinese furniture from the collections of Dr Arthur M. Sackler, a psychiatrist, businessman and philanthropist, will also go under the hammer on Wednesday.

Art Is Good As Gold In Inflation Era — Bloomberg

Fund Managers Moving Towards Art As Investment Diversifier, Will These Managers Balance Their Art Portfolio Investments With A Global Mix?

Castlestone is investing in western artists like De Kooning. By focusing only on western art, is the fund going to miss out on higher returns later?

Castlestone is investing in western artists like De Kooning. By focusing only on western art, is the fund going to miss out on higher returns later?

We have written before on Castlestone Management, a $660 million investment fund that focuses on works of art, which the fund feels is a better investment over the long term than traditional hedges like gold or other hard assets. Today, Bloomberg has an excellent profile of the fund, noting that it is designed to benefit from one of art’s great features — a resistance to the great asset de-valuer: inflation. Castlestone, and art investment funds like it are , Farah Nayeri writes, “designed as an anti-inflation shelter at a time when recession-busting stimulus packages are flooding the global economy with cash.” So with the number of these funds increasing, as investors look for inflation-defying destinations for their money, will they get with the program and look for a more global mix, made up of Chinese, Indian, and other emerging artists? Or will they stick to their Picassos and Warhols?

It looks like Castlestone may be up for anything as time goes on, but at the moment they seem to be a bit top-heavy with artists who are late in their career. However, with this sort of fund growing and becoming more popular with inflation-weary investors who aren’t up for the rollercoaster ride of investing in gold, stocks, or jewels, an art fund might be just the thing.

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DeBeers Wooing Safe-Haven Investors – FT

Stock Fluctuations Lead Investors To Continue Searching For Diversity: Gold, Diamonds, Art, And Wine

Diamond and gold producers and contemporary art and wine auction houses are increasingly targeting Chinese investors and sovereign wealth funds

Diamond and gold producers and contemporary art and wine auction houses are increasingly targeting Chinese investors and sovereign wealth funds

Today’s Financial Times has a feature on investors who are turning to traditional hedges against stock market turbulence, and the way major diamond producers like DeBeers are ratcheting up their marketing and outreach efforts to get these people’s attention. Although diamonds fell mainly out of favor in recent years in many developed countries due to their sometimes controversial nature, diamond consortia have seen their fortunes turn around rapidly as they increased their foothold in emerging markets like Russia and China.

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The Rising RMB And You: What Does It Mean For Art Collectors?

As China’s Currency Becomes Increasingly Global, Will Collectors Of Chinese Art Benefit?

As the RMB appreciates and becomes more convertible, Chinese assets like art look to be a smart hedge. Painting: Chinese contemporary artist Qi Zhilong's "A Chinese Girl In Male Military Uniform No. 2" (2006)

As the RMB appreciates and becomes more convertible, investing in Chinese assets like art looks like an even better option. Painting: Chinese contemporary artist Qi Zhilong's "A Chinese Girl In Male Military Uniform No. 2" (2006)

In recent months, a number of high-profile Chinese and world economists have increased their calls for the creation of a truly “global currency,” which would diminish the US dollar’s role as the de facto international currency sooner rather than later. Although this concept is still far off, as these economists concede, definitely within the next 10-20 years the dollar’s primacy will be challenged, if not completely nonexistent.

Although this is not some kind of dollar apocalypse, but rather a readjustment of the global economy based more on a realistic global picture. In the post-Cold War, post-BRIC-growth world, we are seeing the world economy pluralize rapidly. So a global currency will require an accurate portrayal of this multipolarity — thus, it is unlikely that the next global currency will be “from” one country. Rather, it is likely to be a multi-currency basket, or “supracurrency” — as the governor of the People’s Bank of China, Zhou Xiaochuan, himself called for in March.

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Put Your Money Where The Art Is

Growing Number and Influence Of Asian Auctions Will Provide Excellent Buying Opportunities For Diversifying Investors And Avid Collectors Alike

Up for auction in Hong Kong, May 24, Liu Ye, Boogie Woogie, Little Girl in New York (2006)

Up for auction in Hong Kong, May 24, Liu Ye, Boogie Woogie, Little Girl in New York (2006)

We have written several times that right now is the best time to purchase both top historical artists and emerging talent. Now that auction season is getting ready to really start heating up, journalists around the world are noticing that there are great deals to be had, and that anyone who is interested in jumping into art as an investment should do so now, when the market is more affordable. Upcoming auctions in Hong Kong and elsewhere are sure to reflect the trends we’ve been noticing — China and emerging contemporary art markets are going to continue to be the best place to put your money. Here’s why:

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