Tuesday, February 19, 2008

Art market shamrock

Oftentimes, art market trends and pricings may be gleaned from auction house reports. A reading of the art tea leaves is especially relevant in light of the financial markets being buffeted by write downs, losses and the ever-present mess that does not seem to go away - the sub-prime mortgage ogre. With that as a backdrop, perusing the latest art market review from Sotheby's (published today) seems like dulcet tones to speculators ears. A quick review and analysis of their sales is published here.

As expected, the number of international bidders for art seems to be increasing with Russian, Chinese, Middle Eastern and Indian bidders accounting for the largest increases in winning bids (percentage wise) year over year starting 2004. The total bidded value for all art by collectors in the United States, EU and UK seem to be holding steady or decreasing. Chart here.

Art markets consistently reflect the changing face of global wealth and the confidence of that wealth in the future, which is as variable as the financial markets. "Petrodollar" is a clever term that characterizes the liquidity and wealth of the Gulf nations and sovereign wealth funds that have recently been so active in shoring up U.S. and European financial institutions. It also characterizes significant wealth in the former Soviet Block, benefiting from the privatizations within the region.
For the past three years, the United States has been a net exporter of works of art. While our traditional buyers have remained present and energetic in the saleroom, bidders from the Middle East, China and Russia have become twice as active, redefining the size and scope of the global art market

In short, their answer to the naysayer and the 'art market will crash tomorrow' doomsday theorist is to shove it. A verdict of "remains astonishingly bullish" seems to simmer to the top of the frothy contents in the report. Time will tell.

l - Liu Ye, ‘I believe I can fly’, 86” X 71”, oil on canvas, 2004

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