Art of investing

Is now the time to start collecting modern Chinese art?

Art of investing

Yao Jui-chung, Dust in the Wind: Bicycle Trails, 2011

Given the country’s professedly neutral stance on many issues, you may wonder what Swiss ambassadors get passionate about. If Uli Sigg is anything to go by, buying Chinese art might be one answer.

Sigg was made Swiss ambassador to China, North Korea and Mongolia in 1995. Over the years that followed he has assembled one of the leading collections of modern Chinese art. “He began amassing an encyclopaedic group of work by China’s burgeoning avant-garde,” comments the Wall Street Journal. “As a result, his collection of 2,200 works includes seminal early examples by artists whose works now sell at auction for millions, including Zeng Fanzhi, who is known for painting men in suits and grinning masks, and Zhang Xiaogang, who is known for painting haunting family portraits.”

Sigg made headlines earlier this month when he announced a donation of 1,463 works to a new museum in Hong Kong. His bequest is worth $163 million, although he will also receive $22.7 million for selling 47 of the paintings.

The new museum – named the M+ – is set to open in 2017 in the West Kowloon Cultural District. Roughly the same size as New York’s Museum of Modern Art, its mission is to showcase artwork produced since 1960, with an emphasis on works from China.

The fact that M+ is opening at all is a reminder that the very best contemporary Chinese art has achieved asset class status. And while the names of most of the artists may not be as familiar as the likes of Andy Warhol and Mark Rothko (whose work Orange, Red, Yellow sold in May for $86.9 million), that may change in the years ahead.

The past decade has witnessed a boom for Chinese artists. In 2007, for example, five of the world’s 10 best-selling living artists (at auction) were said to be from China. But in the past year investors in contemporary Chinese art have grown more cautious, in synch with the greater uncertainty across the global economy. The number of transactions at auctions in Hong Kong and on mainland China so far this year is down 41% according to Artron Art Market Monitoring Centre, with turnover off by 25%.

To many this vindicated the view that the Chinese art market was a bubble waiting to burst. Nevertheless others see the current correction as a buying opportunity.

The question is where to start.

Those looking for value, says one expert, should focus on artists such as Xu Lei and Taiwan’s Yao Jui-chung. Still ‘relatively affordable’ (£50,000-£150,000 per piece), the two are best known for their paintings in ink. “Excellent work by artists using the ink medium are still incredibly undervalued both in comparison with their Western counterparts, such as Damien Hirst, and also compared to other mediums of Chinese contemporary art such as the more recently popular oil paintings,” Michael Goedhuis, a leading international dealer told WiC (Xu and Yao are two of the 38 Chinese artists he represents).

“Chinese ink painting and calligraphy constitute one of the foundation stones of Chinese civilisation. These artists have embedded the traditional techniques into contemporary art, just as Picasso and Cezanne used work of older masters to produce their own revolutionary pictorial language,” adds Goedhuis.

“Works of the more established ink painters Zhang Daqian (1899-1983) and Qi Baishi (1864-1957) have already achieved high prices at auction, such as $65 million paid for Eagle Standing on Pine Tree; Four-Character Couplet in Seal Script by Qi Baishi. And I believe this trajectory will be replicated by the current works being produced. As Britta Erickson [a US scholar and curator of modern Chinese art] pointed out, these are ‘the most idealistic and intellectually daring of China’s artists’, and are meaningful for contemporary society in China.”

Xu Lei may be known to wine lovers: he was commissioned to produce the label for the 2008 vintage of Chateau Mouton Rothschild (the first Chinese artist to be asked). He clearly views his work as being at the more cerebral end of the scale. As Xu told The Daily Telegraph: “Modern Chinese art is big and empty, full of eye-catching tricks. It is like fast food for the audience, obvious at first glance and only intended to entertain. This does not respect the wisdom of the art viewer.” Ink paint is not the only medium due for a re-rating.

According to Rebecca Kozlen from Asian Art in London, video art (a medium that relies on moving pictures) is another promising area.

Which artist might a buyer consider? “Huang Ran produces visionary videos, and has already participated in numerous exhibitions worldwide,” Kozlen told WiC. “He is one of the youngest artists to do well last year. With the top Chinese galleries investing in him there’s still lots of space for growth while Chinese collectors are learning more about video art from Zhang Peili, the father of Chinese video art, and his popularity.”

Whichever the artist chosen for investment, Sigg’s experience is instructive. He diversified his portfolio, knowing that many of his 2,200 pieces wouldn’t yield high returns.

For those wishing to see examples of modern Chinese ink painting, an exhibition Ink – The Art of China is open until July 5 at the Saatchi Gallery, Duke of York’s Square, in London.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.