Christie’s record billion HKD evening sale total in Hong Kong this past weekend culminates a decade’s work. Auctions in Hong Kong were dominated until very recently by the much higher values for Chinese ceramics and other works of art. It was only with the birth of the market for Chinese Contemporary art a little more than a decade ago, which was first developed in New York, that painting and a pan-Asian Evening sale began to make sense in Hong Kong. Over time, the value of Chinese modern and Contemporary painting along with increasing cross-border collecting of Contemporary artists from Japan and Southeast Asia, has made the Evening sale of paintings the most valuable event in Hong Kong sales cycle.
Christie’s demonstrated that this weekend. But the seeds were sown in 2008 when Zeng Fanzhi’s Mask Series 1996 No. 6 made 75.36m HKD (~$10m). Our friends at Pi-eX put together historical charts of the growth of Christie’s Evening sales in Hong Kong for AMMpro subscribers. As always with Pi-eX, the charts are of hammer prices and some do not include works that do not have published estimates.
You can see from this chart of the last 11 years of sales information for the Spring cycle of Evening sales that the first year was around $50m, a strong start. The global financial crisis pulled back sales totals for two years before reaching that level again in 2011 which was a peak year for Chinese art buying as the wealth accumulated in China began to focus on art. Instability in China’s economy restrained sales totals again until 2015 when totals breached the $60m mark.
By 2015, the composition of those sales were fairly well established with Sanyu, Zao Wou-ki and Chu Teh-Chun providing the lots with the greatest value and market leadership. Strong showings for Zeng Fanzhi, Yoshitomo Nara, Kazuo Shiraga, and Wu Guanzhong often helped top up the sales.
There was another pull back in the market from 2016 to 2017 before this weekend’s strong updraft. The immediate question is whether this new market level is sustainable or the Hong Kong market will follow the previously established pattern of a peak year followed by two to three years of consolidation before recovering the same level or exceeding it. The strong surge in 2018 is far greater than previous increases which might suggest the market needing to digest again.
A chart of performance against estimates tells a different story. Even in the tough years of 2009 and 2010, Christie’s was able to sell at or above the high estimate until 2014. Estimate levels in 2014 and 2015 proved higher than the works could achieve even though the overall totals were above the previous years. In 2016, there was a collapse in the market with sales falling far below the estimate level with 30% of the lots unsold. In 2017, estimates were reset lower and the sale performed toward the middle or low end. Even this record year shows middling performance against the published estimates.
What could that mean? For a variety of reasons related to the age of the market in China and Asia for paintings, the sales seem to be driven by high expectations from sellers since 2014. In other words, the market is rising to meet the perceived value of art in Asia. Buyers seem to be responding but there’s still something of a standoff. This isn’t a bad thing. As you can see from the volatility of performance against estimates in both the chart above and the one below, which shows average lot performance against the average of estimated lots, markets are made more in bottoms than in tops. By that we mean, competition can drive high prices but selling out of necessity instead of desire—and finding a buyer—is the confirmation of value that markets look for.
In 2016, average lot values in the Christie’s Spring Hong Kong Evening sale reached a low point. That level was the same as the crisis year, 2009. China’s economy in 2016 was also struggling with the lowest growth rates in 25 years. If Chinese buyers were willing to still spend money on art in the face of those challenging conditions, it sent a pretty strong signal that art was not a fad. The quick rebounds of 2017 and 2018 seem to confirm that.
Finally, let’s look at Pi-eX’s useful graph balancing lots sold below or at low estimates against the value of work bought for prices above the low estimate or competitively. These graphs show how discriminating the market is. In years like 2009, 2010 and 2012, there was such strong demand that few works were sold below the low estimate or bought in. You can see that a great number of works of substantial value were bought in 2016, the highest level by far of any year since these sales have been held.
The rapid growth in 2018 would suggest the kind of buying that is indiscriminate and across the board. But as the Evening sale values soared in the last two cycles, a substantial amount of the work on offer was unable to attract a buyer at the seller’s price. Bidders have limits and are making informed choices. That’s also a very good sign for a market’s long-term strength and confidence.