Shanghai Daily looks approvingly at art funds in China. Though they make the constant mistake of taking a few isolated fund successes and assuming art funds have a proven track record in the West, the real appeal of art investing comes from disillusionment in other markets. “These funds have cleverly positioned themselves to attract an affluent clientele who seeks solid returns, but see no hope in the inflated property, bond and stock markets.”

In April, a one-year art trust fund co-established by Bonwin, Bohai Bank and Zhongrong International Trust Co Ltd, sold out in three days and raked in 60 million yuan in funds. The expected return for the financial product is 10 percent. […] Due to the uncertainty of China’s contemporary art market, most of the current art funds focus only on China’s modern ink-wash paintings and calligraphy. “. . . such as those by Qi Baishi, Zhang Daqian and Fu Baoshi,” says Cao Liang, the media manager at Bonwin. “This is because the value of China’s modern ink-wash paintings and calligraphy is widely considered to be fairly low risk. Yet price fluctuations make the Chinese contemporary art market a bit unclear right now.” […]

The art investors’ “buy high, sell high” ethos was artfully illustrated by Liu Yiqian, a renowned stock market and art investor, who in May sold a painting by modern Chinese artist Qi Baishi for 425.5 million yuan (US$66.5 million), a record high for modern and contemporary Chinese paintings and calligraphy. After the sale at the China Guardian 2011 Spring Auctions in Beijing, Liu revealed that he had purchased the painting for a sizeable 20 million yuan a few years ago.

The sale echoed Liu’s previous comment that “any art has no value until it becomes the target of capital.”

Art Funds Paint Beautiful Profits (Shanghai Daily)