ASIAN ART BOOM MIRRORED ELSEWHERE AS GLOBAL RICH GET RICHER
By Tom Mitchell in Hong Kong
Tuesday, December 05, 2006
In a region where a Chinese bank looking to raise $22bn can attract half a trillion dollars in initial public offering of shares orders, $19.4m (£9.8m) does not seem that much for a piece of porcelain.
The price paid for an 18th century imperial Chinese "swallows" bowl at the Hong Kong auctions of Christie's this week - a world record for a Qing dynasty ceramic - is a reminder that Industrial and Commercial Bank of China's mega-IPO in October was just one facet of an investment craze sweeping Asia. "What's happening to us is symptomatic of what's happening to the world," says Edward Dolman, Christie's chief executive. "It's being driven by the extraordinary amounts of cash that are around. It's a great time to be selling art."
The London-based auction house tallied sales totalling more than $363m at its spring and autumn Hong Kong auctions this year, compared with just $100m in 2003. Rival Sotheby's, which concluded its biannual auctions in the territory in October, realised sales of $246.5m. Records fell fast and furiously at both houses, for everything from early 15th century Sino-Tibetan gilt bronze sculptures to modern Chinese oil paintings.
Mr Dolman credits the nouveaux riches of China and India for the current Asian art boom, but despite their enthusiasm they are still only keeping pace with their western peers.
Regardless of whether an auction is held in the US, Europe or Asia, Christie's calculates regional sales totals based on the addresses registered by buyers, providing a rare window on to global wealth creation and capital flows. This yields some distortions thrown up by tax havens - "our Swiss buying has always looked very strong", Mr Dolman notes - but it also shows Asian purchasers accounting for a relatively modest 10 per cent of demand.
This is because the rich are getting richer everywhere, not just in Asia, and as they do so their capacity for conspicuous consumption of art is expanding. This year, for example, some 170,000 employees of the big five US investment banks and brokerages - Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns - are expected to pocket bonuses totalling $36bn. Marc Faber, an Asia-based investment strategist and author of the Gloom Doom & Boom report, estimates the big five's overall employee compensation outlay at $55bn-$60bn - about equal to Vietnam's gross domestic product. "Something is a bit bizarre in the world," Mr Faber concludes. "The liquidity of the global middle class is not there but the liquidity of Goldman Sachs partners is soaring."
"We've never seen so much money coming in from China, Russia, Wall Street, the City, India," Mr Dolman adds. "We always think, 'Is it about to go?' But most of our clients can always afford [to buy art]. It's about how confident they feel, and there is a feeling of stability about the clients' sources of wealth."
The last great art craze of the late 1980s is a reminder of Asia's potential as a consumer of all things artistic.
After the stock market crash of 1987 damped demand in the US and Europe, Japanese money supported the market for another two years. "The Japanese came into relatively small markets with so much money that they drove the markets insane," Mr Dolman remembers. As a result, Asian buyers then accounted for approximately a third of global art purchases.
Christie's thinks Asia could again account for 30-35 per cent of the market within five years. But before this happens Chinese and Indian buyers - like the Japanese before them - will have to demonstrate an interest in art from beyond their own regions.
There are more and more anecdotal examples of an eclectic art taste developing in the region.
Last month Joseph Lau, a Hong Kong property tycoon, secured a quintessential piece of modern American pop art, albeit one with considerable Chinese characteristics.
Mr Lau's prize, acquired at a Christie's auction in New York for $17m, was Warhol's iconic portrait of Mao Zedong. It was the most ever paid at auction for a Warhol, but Mr Dolman seems to reckon it a bargain. "The amounts of money sloshing around are huge," he says. "What's $17m for a Warhol in the scheme of things?"
