Sotheby's autumn HK sales drop as China economy slows

HONG KONG -- Sotheby's sold HK$2 billion ($258 million) worth of Asian and Chinese artwork and luxury goods in its autumn sales in Hong Kong on Tuesday, a 37 percent decline from the same period last year as the market consolidates on a weaker China economy.

The tally was also some 18 percent less than the $316 million Sotheby's sold in its Hong Kong spring sales.

The modest showing comes as two major Chinese auction houses muscle into the Hong Kong market for the first time, posing a fresh competitive threat for Sotheby's and rival Christie's whose revenues in Hong Kong have soared on the Chinese art boom in recent years, but which may now be difficult to sustain.

Anchoring the five-day auction series was again Chinese imperial ceramics with a pair of yellow ground famille-rose double-gourd Qianlong vases fetching HK$107 million ($13.7 million) while a pair of turquoise-glazed "pomegranate" vases from the Qianlong period that sold for HK$23 million from the prominent J.M. Hu collection of Qing monochrome wares.

Faring less well, however, were pieces of lesser quality and minor flaws amid more discriminating bidding, with buyers indifferent to some porcelain pieces from even great old European collections such as the Meiyintang.

"It's still quite strong, but more selective," said John Berwald, a London dealer in the room. "It's not so crazy and I think it's better like this. It has just lost some of its exuberance," added Berwald who bid for several Qing wares.

China last year accounted for nearly 44 percent of global auction revenue, according to the French government's Conseil des Ventes art market report, and is a vital driver for the global art market now, making Sotheby's results a stress test of sorts with broader art sector repercussions.

But the market has been dogged by a proliferation of issues including a large-scale Chinese customs probe into tax evasion on art imports that has cooled recent sentiment, while high art taxes, complex regulations, widespread fakes and market manipulation remain tangible risks.

China's annual economic growth is expected to slow for a seventh straight quarter to the weakest level since the global financial crisis, with luxury demand having waned substantially.

"To cool down a bit is a good thing," said Zheng Hong, a Chinese mainland buyer at the ceramics sale. "Last year, it was too high ... China's economy is weakening, property and other sectors are not booming as before, so this is a natural result."

In Sotheby's contemporary Asian art sales, demand was again patchy, even for blue chip artists with 27 percent of lots going unsold, though master works like a 1992 painting by Liu Wei, "Revolutionary Family Series - Invitation to Dinner," made an artist record of $2.24 million, while Indonesian modern artist Lee Man Fong's "Fortune and Longevity" also fetched a record $4.4 million after competitive bidding.

Sotheby's fine Chinese paintings sale was strong with 97 percent of works sold by lot, including auction favourite, Chinese ink master Zhang Daqian's "Swiss Peaks; calligraphy in Xingshu", and Fu Baoshi's "Lady at the Pavilion" that each sold for HK$23 million.

New Hong Kong auction debutante China Guardian, now ranked among the world's top four auction firms is shaking up the landscape in older Chinese paintings, having sold some of the most expensive ink brush paintings in the world in recent years including Qi Baishi's "Eagle Standing on Pine, 1946" that fetched 425 million yuan ($57.2 million) in a Beijing sale.

At Guardian's debut Hong Kong auction on Sunday, a landscape series by Chinese ink painting master Qi Baishi, "Album of Mountains and Rivers, 1922" sold for HK$46 million, helping the Chinese house notch up an eye-catching HK$455 million sales total, nearly a quarter that of Sotheby's overall autumn tally.

Sotheby's, however, recently forged a breakthrough partnership with a Chinese art firm to enter the Chinese mainland market in Beijing for the first time, which could lead to fully fledged sales early next year and let them take on Guardian in their home base.

Chinese authorities have long refused to grant licenses to Sotheby's and Christie's for the lucrative mainland market, with Beijing topping even New York and London for art and collectibles revenues last year with sales of 6.4 billion euros ($8.30 billion) according to the Conseil des Ventes French government annual art market report.