Chinese Art Market Slumps

HONG KONG -- A gloomy economic outlook brought about by China's slump amid the ongoing anti-corruption campaign is set to hit the art market as the autumn auction season kicks off this week.

Art collectors of ArtKabinett social media network are witnessing significant deflation in prices of their Chinese contemporary works.

At the actions, art market insiders said fewer mainland buyers were expected in the bidding room and prices of artworks were likely to fall back to a reasonable level.

Key players such as Sotheby's, Bonhams, and Poly Auction Hong Kong will be hosting sales this Saturday, coinciding with the opening of art fair Fine Art Asia, which is in its 10th year. This will be followed by the Asia Contemporary Art Show, which opens on October 8.

While Bonhams will host its first sale of modern and contemporary art in the city, Sotheby's Hong Kong is offering 3,909 lots of artworks and luxury items for its autumn sale, which is estimated to fetch HK$2.3 billion.

Among the highlights are renowned collector Dr Yip Shing-yiu's collection of Ming dynasty furniture and an imperial portrait of Consort Chunhui by Giuseppe Castiglione, which is expected to fetch more than HK$60 million.

Kevin Ching, chief executive of Sotheby's Asia, said the current economic climate might not be the best time for the art market, compared to 2011, when auctions and private sales in Asia brought in US$1 billion. Sotheby's Hong Kong recorded HK$2.7 billion in its spring sale this year.

Ching said the auction house was "cautiously optimistic" despite China's economic slowdown as "the art market and the economy don't always move [at] the same speed".

He said the auction market remained strong in the two years following the Black Monday stock market crash in 1987. A similar scenario was observed following the Asian financial crisis in 1998, he said.

In 2008, Sotheby's Hong Kong autumn sale -- which took place just one month after Lehman Brothers went bankrupt -- brought in almost HK$1.1 billion, the third highest record for the auction house at the time.

"When the market is volatile, more money goes to tangible investment that is less conventional like art. It is wise to put art in one's portfolio to reduce risks," Ching said.

He said there was no lack of buyers despite the slowing economy. "But it is more difficult to convince sellers to part with their top pieces," he said.

The composition of buyers has changed amid the mainland market slowdown. Ching said that back in 2011, mainland buyers contributed 50 per cent of Sotheby's business in Asia.

"But as of last year, business from mainland China accounted for 20 to 30 per cent of our business. Mainland China, Taiwan and Hong Kong are now equal players," said Ching.

He expected prices to be more reasonable and categories such as Chinese paintings and works of art, which have a longer history in the market, would perform because of a bigger collector base.

Andy Hei, co-chairman and director of Fine Art Asia, said the market turmoil was expected to affect auctions rather than art fairs.

"Now in fact is a better time because the speculators go away and we can focus on working with seasoned collectors and find new clients," Hei said. "Prices will be more rational."