As China's CSI 300 Index purged about 4.67 trillion yuan of market capitalization since October 16 in one of the most bearish months since 1995, equity markets speculators were badly hit. Another group of investors were equally hit by the crisis: Chinese art lovers.
Zhang Xiaogang, 49, a contemporary Chinese symbolist and surrealist painter, typically has paintings that are among the highest priced at Sotheby's and Christie's International auctions. But with bad news looming in the markets, two of Zhang's paintings failed to meet the minimum reserve price at a Poly Auction Co. night sale, while only a third of all paintings exceeded Poly's top price estimates. This sale was the antithesis of Poly's auction in June, where more than 75 percent of all paintings sold for more than the top price estimates. What gives?
1. The crashing stock market. "At the back of our minds...China has entered a bear market," said Song Ping, ex-First Secretary of CPP Gansu Division, mentor of Hu Jintao and Wen Jiabao, also an art enthusiast. "[The stock market] puts a limit on how much money we're willing to pay for art pieces that aren't truly extraordinary...[and] gives us the motivation to be more picky."
2. The People's Bank of China, China's central bank, raised key lending rates to a nine-year high in September, slowing the flow of money into financial and perhaps art markets.
Good news though: one of Zhang's paintings, a version of "Family" from 2000, sold for more than 40 percent above the top estimates. Every cloud has a silver lining.
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