Painting by numbers? China art trading house promises investors sound platform

Wed Feb 24, 2016 8:49am EST
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By Farah Master

HONG KONG (Reuters) - As China's economy wheezes to a 25-year low, investors who once collected stocks and property are turning to what they are willing to believe will become a new safe haven market - a trading platform for fine art.

Even as the global fever among connoisseurs cools for Chinese art, Hong Kong-based Takung Art Co said its revenue and profit jumped along with rampant growth in valuations for a portfolio of paintings, jewelry and precious gems. Via Takungs's platform, investor-enthusiasts can partly own, buy and sell Chinese art pieces over a 10-year period.

Earlier this week, the small U.S.-listed firm said thousands of customers like Shenzhen-based finance professional Zhou are boosting trading of units in artwork listed on its platform. Takung said the notional value of its portfolio of contemporary pieces has surged over 700 percent to $179 million since it launched the platform at the end of 2013.

"We all want an easy, safe place to earn money," said Zhou, 37, who declined to give his full name. Formerly a stock investor, Zhou said he researches art trends personally and currently has around 400,000 yuan ($61,360) tied up in Takung's platform: "Here I know my assets are safe, and for a long time."

Online art marketplaces have proliferated as the Internet has grown, with sites from Beijing's to New York-based Artspace offering art lovers an alternative to traditional auction houses. Giants of e-commerce are also in on the act - Inc operates Amazon Art, featuring $200,000 oil paintings.

But traditional art auction houses such as Sotheby's and Christie's International have seen overall sales slow of late amid global economic uncertainty. By 2014 the global auction market for Chinese art and antiques had slid to $7.9 billion, nearly a third below its 2011 peak, according to a joint survey by online auction platform Artnet and the Chinese Association of Auctioneers.

Philip Hoffman, chief executive of the Fine Art Fund Group in London, said he would be very surprised if Takung's model was translated outside China as the mode of investing was risky.

"A lot of these people (using the online platform) simply have the financial approach with no art understanding whatsoever," said Hoffman, whose fund manages $350-500 million in art assets.   Continued...

Part of a Chinese painting is shown at a warehouse rented by Hong Kong Takung Assets and Equity of Artworks Exchange Co. Ltd. in Hong Kong, China February 18, 2016.   REUTERS/Bobby Yip