Beijing, 23 July 2012
An article by Katie Hunt, published on The Art Newspaper’s website, warns against the limits of the Chinese art market.
The strength of the Chinese art market, the first economy in the world when it comes to arts and antiques, led to a parallel boom in art funds and in other investments in arts amounting to more than $9m.
Other sums reaching millions result from the financial products linked to art, especially offered by investment trusts enabling people to buy and sell shares in individual works. This technique has been adopted by Chinese buyers eager to develop their portfolio at a time when traditional investments perform badly while being more and more submitted to government restrictions.
Experts warn that many of these practices are poorly regulated as they lack a legal framework and as their managers lack experience of the market. This financial game represents now a problem as the World Bank is announcing the weakest growth in twelve years, something which will impact the art market.
“Art investment in China is new, and it’s very much ‘make the rules up as you go along’,” It lacks a lot in terms of clarity and compliance, and it’s hard to gauge whether the level of professionalism is there.” stated Bobby Mohseni, the director of the art advisers MFA Asia in The Art Newspaper.
The explosion of these investments funds in art has sparked concerns. Their percentage is higher than in the United States or in Europe. Most of these funds operate with short maturities of two years. Investors could soon withdraw their funds.