Hong Kong’s subdued spring auction sales: too few good lots or too many auction houses?

With most auctioneers reporting results that were flat or below last year’s, some observers point to problems Chinese buyers had accessing funds, but others cite rising competition and unappealing art

PUBLISHED : Thursday, 01 June, 2017, 5:50pm
UPDATED : Thursday, 01 June, 2017, 6:19pm

China’s ultra-rich are still buying luxury homes in Hong Kong and the Hang Seng index is up 16 per cent so far this year. So why is the local auctions market so subdued?

The second round of spring auctions was held over the last week of May and almost all the major auction houses reported flat or lower results compared with last year’s – just as Sotheby’s and Poly Auction reported lacklustre sales in April when they had their spring sales.

There were, as in April, a number of star lots that fetched record prices, which only served to deepen the mystery. After all, they clearly showed that the money was there.

On May 27, Christie’s sold Zao Wou-ki’s 29.09.64 (1964) for HK$152.9 million at the evening sale of 20th century and contemporary art. The selling price quoted includes fees, as are all the figures below unless specified. The sum was several times more than the top estimate and a new auctions record for the artist.

On May 31, a celadon-glazed “double dragon” amphora from the Qing dynasty reign of Emperor Yongzheng was sold for HK$140.5 million, becoming the most expensive monochrome Chinese porcelain sold in auctions.

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At Phillips’ evening sale on May 28, a new auction record for a living southeast Asian artist was set when Small Flies and Other Wings (2013) by Indonesia’s Christine Ay Tjoe fetched HK$11.7 million. Other highlights included Sean Scully’s Wall of Light Green (2013) which sold for HK$10.9 million, much higher than the top price of HK$5.5 million before fees that it was valued at.

Overall, Phillips sold HK$312 million worth of lots in its sales this week, down from HK$389.3 million last November when it expanded into Hong Kong. China Guardian sold HK$326.4 million versus HK$338 million last spring.

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Christie’s sold HK$2.45 billion worth of lots during the week, 13 per cent less than last year despite adding Western paintings to its evening sale for the first time as Asian collectors diversify.

There are too many mediocre lots in the sales. When something really good appears on the market, people are happy to pay for it
William Chak Kin-man

Demand for this new category was mixed. Gerhard Richter’s Abstraktes Bild (687-2) (1989) fetched HK$33 million, but the hammer price of HK$28 million was well below the lowest pre-sale estimate of HK$32 million. A 1961 untitled work by Cy Twombly was unsold. The work has been in Christie’s possession for two years since it was passed in a May 13, 2015 auction in New York.

Christie’s also sold Zhang Daqian’s Ancient Temples Amidst Clouds (1965) for a whopping HK$102.5 million in a single-lot sale with its own catalogue. But it’s a far cry from the HK$270.7 million that Chinese billionaire Liu Yiqian paid for Zhang’s Peach Blossom Spring (1982), another of his splashed-ink landscapes, a year ago.

Beijing’s crackdown on corrupt officials has probably had an impact, for they, or their bribers, definitely bought through auctions.

For example, Wu Guanzhong’s In Memory of Hong Kong (1991) was sold for 2.8 million yuan by Poly Auction in 2008. It was later discovered among the items confiscated from former Tianjin police chief Wu Changshun after he was arrested for corruption.

Hui Lai-ping, who publishes books and periodicals on Chinese art and collects Chinese paintings and calligraphy, said he was aware of some Chinese buyers having trouble getting money across the border because of the new capital controls Beijing has imposed to curb the outflow of yuan.

“I have found things that I can afford this time round. Prices are still not cheap but if you grit your teeth, you can go home with something. That’s because the speculators have disappeared,” he said.

But capital controls should also have made a dent in the luxury property market and other sectors popular with Chinese investors.

“I don’t think they have much of an effect on the sale of high-value lots in auctions,” said William Chak Kin-man, a veteran antiques dealer based in Hollywood Road. “The ultra-rich have so many assets outside the country they cannot be affected. I think it’s because there are too many mediocre lots in the sales. When something really good appears on the market, people are happy to pay for it.”

Hong Kong antiques dealer Andy Hei said: “I have also heard that Chinese customers have trouble settling their bills with Unionpay credit cards. There is no rule banning its use in auctions outside China, but generally, banks are asking Chinese account holders a lot more questions regarding their overseas spending.”

For the past couple of years, auction houses have complained that the real reason for tepid growth is because collectors don’t want to sell their top pieces when the market is not at its best. Guillaume Cerutti, new chief executive officer at Christie’s, told the Post that he expected the situation to improve this year.

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Chak said that dealers have generally reported that the market in Hong Kong this year was better than last year’s. Bonhams, which has become more low-profile these days, saw quite lively bidding at its recent sales of Chinese paintings and works of art, he said.

“The real problem for auction houses is competition,” Chak said. “Thirty auction houses were active during so-called Asia Week in Hong Kong this month. Last year, it was 20. The market is being stretched thinner. I think collectors will appreciate having more time to look around and not feel quite so pressurised.”