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)

Following a recent report in The Art Newspaper on an academic study of the discrepancy between import and export values of works of art leaving and entering China, CNN takes a broad look at the ways in which the international art trade is being used by wealth Chinese to export capital. The art market is useful vehicle for these capital transfers because it regularly makes cross-border all-cash transactions in objects that have “fuzzy” value and opaque ownership.

What’s especially significant about the report is the way in which the global art trade infrastructure must be complicit in this activity.

The rush of money out of the country is taking place in spite of Beijing’s strict capital controls — which limit the amount of money an individual can move out of China to $50,000 per year. […]

Here’s how it works: Rich Chinese purchase a piece of art in mainland China, then sell it at a hefty price across the border. The profits — in foreign currency — are then pocketed.

Another method is to buy artwork from outside China — often at an inflated price from an associate. The associate, who’s in cahoots, takes a cut and then deposits the remaining payment in an offshore bank account of the buyer’s choosing. If the authorities come knocking, it’s easy for the buyer to produce a receipt and the art — even if it was fabricated for the laundering scheme. […]

That makes it difficult for anyone reviewing purchases, including the Chinese government, to accuse a buyer of over-paying, said Steve Dickinson, a China-based lawyer with Harris & Moure.

“It’s just beautiful, because no one can challenge you on the prices,” he said. “It could be five bucks; it could be 50 million bucks.”

Chinese snap up fine art for use in laundering schemes (CNN Money)

A report on the Romanian art market in 2013 says there was €15m in sales clustered around works of “national importance.” like Stefan Luchian’s Doua Fete (Two Muses) which sold for €300k. The contemporary market in Romania rose 10% to €1.4m or slightly below 10% of the overall Romanian market:

“However, despite the significant increases in the last three years, the Romanian contemporary art market is still in a process of gradual understanding and appreciation, far from the potential reached by other countries in the region, such as Poland, Russia, Ukraine and Turkey,” reads the report.

Romania’s art auction market reaches EUR 15 mln in 2013 (Romania Insider)