Philately may not be a word that trips off too many tongues in Hong Kong, but there are signs that stamp collecting is catching on in this part of the world. Rare stamps can prove a decent hedge against inflation - and buyers with the right knowledge can make good profits.
Venerable stamp shop Stanley Gibbons, at 399 Strand in London, has seen the first signs of strong interest in stamp collecting in Asia over the past year or two. That has resulted in several records being broken, including the purchase of a block of four stamps from the Cultural Revolution for HK$8.97 million at an auction in Hong Kong in 2010. That is the highest-ever value for a block of Chinese stamps.
The record-setting block, bought by an unidentified collector in Hong Kong, features a design known as Mao Zedong's 1968 Inscription to Japanese Worker Friends. They were never issued, because the Japanese government, worried that the revolutionary message from Mao would cause Japanese people to riot, objected to Beijing.
In mid-December, a four-day sale held by InterAsia Auctions raised HK$62.3 million, with the sale of 3,800 lots. That made it the largest auction of mainland and Hong Kong stamps in the world in 2012. The auction that saw the sale of the Mao stamps - thought to be the only surviving set - raised HK$98.7 million in 2011.
Jeffrey Schneider, the founder and director of InterAsia Auctions, organised his first sale of stamps in Hong Kong in 1990, and in Singapore in 1993. There are two markets for Chinese stamps, he says. One group of collectors focuses on "classic stamps" from before 1949, particularly the Qing dynasty. This is a relatively stable market, he says: "It's a blue-chip area, where you have a steady customer base."
The other distinct group of collectors focuses on "new China" (post 1949) stamps, mainly from the Cultural Revolution, a time when stamp collecting was banned.
"The market for the modern things is very volatile," Schneider says. "We went through a period between 2010 and 2011 when values went up 300 per cent in 18 months. Some stamps went up 10 times - which is very dangerous."
"We all start the same way," Schneider adds. "It's parochial, you collect the country that you live in."
Collectibles such as art, fine wine and rare coins or stamps are esoteric assets for investments. But they can retain their value and gain at or above the rate of inflation. Money managers say they are not against their clients parking money in collections, although they don't typically advise on managing them.
Alex Ng, a consultant at the Tyche Group, a financial advisory firm, says he prefers to make use of hedge funds to gain access to alternative investments.
But he does come across clients with substantial collections. He thinks this is "reasonable", as long as the total value of the collection is not more than 10 per cent of a wealthy client's portfolio.
Ng also cautions that stamps are an illiquid investment - they are difficult to sell in a hurry. They also involve special care, pay no yield and can involve some steep transaction costs. "Most stamp collections are sold in auctions and the charges [to the auction houses] are quite high," he says.
Like most forms of collecting, you should collect stamps because you love them. Investment should be a secondary consideration.
If you score a windfall with your collection, that's something which should be considered a bonus.
"In middle school and high school, most people looked down on stamp collectors," Schneider says. "Now Chinese people treat it [a stamp] as a historical and artistic work. They have a reverence for it and an appreciation of it."