Russian Buyers Have Been the Focal Point for the Fall Sales

With a Turn in Their Markets, Will the Oligarchs Still Buy?

The Hong Kong sale results have many making predictions about the future of the Asian art market. But Asia hasn’t really been the motor in the overall art market. Russian buyers have played a bigger part in driving the Contemporary and Impressionist markets. With the Frieze sales in Lodnon just around the corner, the real question is what role the closing of the Russian stock markets and the flight of capital from the country will play in the Contemporary art market–and in New York a few weeks later.

Here is Breaking Views on the Russian situation:

[T]he global liquidity freeze has hit the country’s banks hard, and their problems have been amplified over the summer by capital flight from foreign investors who fear the Kremlin’s unpredictability. Russian exchanges have lost more than two-thirds of their value since their highs in May. [ . . . ] The financial storm is hitting Russia at a bad time. The Georgia war has scared investors, inflation is rocketing and oil prices are tumbling. Russia had wisely set aside its oil windfall profits in rainy-day funds and can now take advantage of its relatively conservative fiscal policies. But its foreign reserves have dwindled by $30 billion in the last month alone. [ . . . ] There’s no clear way for Russia to regain investors’ confidence. A comprehensive reform of its financial system to make it better capitalized and more transparent would be a good place to start.

No one is saying the Russians are suddenly broke. But it will be interesting to see their attitude toward art purchases in this global environment. Like gold, art retains some attractions as flight-to-safety investment, a factor that could still be in play this Autumn.