Poly Culture’s IPO in Hong Kong was up 29% on the first day, according to the Financial Times. The shares priced at HK$33 before the rise even with a prospectus that warned of the real problems with payments in the mainland auction market:

One report by government and industry bodies found that of the items with a hammer price of more than Rmb10m auctioned in 2012 by Poly, only 34 per cent had been paid for by May 2013. That compared with a 47 per cent average for the mainland auction industry and an 83 per cent record for rival China Guardian.

But while Poly says in its prospectus that it is “well-positioned” to benefit from the expanding art market in China, one risk it highlights is that there is “no assurance that we will fully recover consignor advances or prepayments of auctioned artwork, which may have a material and adverse effect on our business”.

Poly issued a statement recently saying: “We admit that there are some problems in China’s art auction market . . . such as payment defaults and payment delays.” It said delays for some high-priced items were significant at the end of 2011 and into 2012 “due to the gloomy economy and tight liquidity”.

Poly Culture paints bright China art market picture (Financial Times)