October 3, 2008 / 10:05 AM / in 9 years

Chinese art market cools in wake of financial turmoil

HONG KONG (Reuters) - The bullish Chinese art market will likely come under increasing strain in the coming months amid the bleak global economic outlook, say dealers and market participants ahead of major seasonal sales in Hong Kong.

<p>Figures by Japanese artist Yabuuchi Satoshi, depicting the spiritual world of traditional Japanese, are displayed in a booth at the Hong Kong International Arts and Antiques Fair October 3, 2008. The bullish Chinese art market will likely come under increasing strain in the coming months amid the bleak global economic outlook, say dealers and market participants ahead of major seasonal sales in Hong Kong. REUTERS/Bobby Yip</p>

Hong Kong’s twice-yearly Asian arts sales in the spring and autumn are a major fixture in the global arts calendar, attracting the world’s top dealers and collectors to the city, which is now considered the world’s third-largest art auction hub after London and New York.

Valuations for top-flight Asian artwork, particularly Chinese contemporary paintings have sky-rocketed in recent years, with record-breaking prices for works by blue-chip artists like Zhang Xiaogang and Zeng Fanzhi boosted by speculative frenzy.

A Zeng painting of masked figures fetched $9.7 million this spring, a then-auction record for any Asian contemporary artwork.

Global auction house Sotheby’s will kick off its autumn sales this weekend from October 4-8, with a trove of Asian art up for grabs including Chinese ceramics and paintings, rare Qing treasures, Southeast Asian artwork, jewelry and watches.

But some market players say demand is waning amid the global turmoil, with prices set to cool after the sustained bull run.

“I have a lot of clients from overseas, from the States and Europe and they won’t want to attend the auction because the Dow went down so much,” said Kevin Lin, a fine art dealer in Taiwan.

“There will be a lot of unsold pieces let’s say HK$800,000 to $HK3-4 million,” Lin said of Chinese ceramics. “Prices are not going to go crazy like before, but stay at the lower estimates.”

<p>A visitor talks on a mobile phone at the entrance to the preview show of Sotheby's Autumn Sales 2008 at the Hong Kong Convention and Exhibition Centre October 3, 2008. The bullish Chinese art market will likely come under increasing strain in the coming months amid the bleak global economic outlook, say dealers and market participants ahead of major seasonal sales in Hong Kong. REUTERS/Bobby Yip</p>

QUALITY COUNTS

With the dimming global economic outlook and the flow of credit freezing up in money markets, Sotheby’s CEO for Asia Kevin Ching said its earlier total sales estimate of HK$2 billion ($257.5 million) for the Hong Kong sales could be impacted.

“Bearing in mind what has happened since, we’ve approached some consignors to see if ... you’d like to lower your reserve (price) or whatever but it’s very interesting that the majority of the people that we contacted seemed comfortable or optimistic enough to stick to the original reserves.”

Slideshow (3 Images)

Sotheby’s shares have dropped 22 percent in the past three months, and 61 percent over the past 12 months.

Ching said strong demand from wealthy mainland Chinese buyers would help prop up sentiment, particularly for top lots like a set of rare Qianlong imperial jade seals and scrolls.

“Our own experience and history has always shown that our market has somehow always succeeded in surviving world financial downturns for at least 2-and-a-half-years, in 1987 and 1998.”

The auctioneer’s stellar sale of works by British artist Damien Hirst last month, defied the economic blues in raking in $198 million, with strong buying by Russians and Europeans.

The organizer of another major art event -- the Hong Kong International Art and Antiques Fair expected to sell a total of HK$140 million ($18.02 million), at least equal to last year’s haul, partly from art’s role as an asset diversifier but prices were expected to ease off and tastes become more discerning.

“Everybody is more cautious. So the items of good quality will turn out to be more and more important,” Andy Hei, the founder and director of the fair told Reuters.

Editing by Valerie Lee

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