A China Play Far From the Volatile Stock Market: Collectibles

Buyers still can invest in China by taking advantage of its ancient history and art that are largely untouched by market gyrations

This gilt-bronze bear sold for $2.85 million. This gilt-bronze bear sold for $2.85 million.

The Chinese stock market might be having a bout of bad feng shui, with volatility and losses spreading across the globe, but this is just a blip in China’s ancient history. There are ways buyers still can invest in China by taking advantage of its ancient history and art that are largely untouched by market gyrations.

A 2014 study by BMO Private Bank found that in the collectibles market, 36% of wealthy Americans surveyed were “most passionate” about art, while 28% were passionate about antiques. Yet art and antiques often overlap, say experts, and one example includes Chinese antiquities, which has had resurgence in popularity since 2005 when China began to open itself to the world.

“Chinese art has captured everyone’s fascination because the country has become so strong, and is one of the most wealthy in the world,” says Michael Bass, International Director of Chinese Works of Art at Christie’s in New York. He says that wealth has made the Chinese “the biggest buyers of their own art.” Doug Van Tress, owner of the Golden Triangle, an Asian art dealer in Chicago, agrees, “The Chinese buyer is definitely in control of the trade now and the prices.”

Bass says unlike paintings or sculptures that are defined by an artist, like Picasso, the difficulty in classifying Chinese art and antiquities is they typically are anonymous. Value is determined by age (some dating back 3000 years), history (very dynastic, some eras are more important than others), and provenance (its story, documentation, when it was created, how it was used, who found it, etc.). And value changes with condition, Bass says. “Age is a factor,” he notes. “But the Chinese want a piece in perfect condition. If the piece has some chip or hairline crack that you really can’t see, it doesn’t matter, it could bring down the price 60% or more.”

That wasn’t the case with three Chinese pieces sold by Christie’s last year that were auctioned for as much as 10 times the estimated price. Last March, an 8th to 7th century B.C. bronze phoenix-form ewer was sold by Christie’s for $665,000, when the starting estimated bid was just over $60,000. Even more remarkable was a gilt-bronze figure of a small bear that was used to hold a corner of a scholar’s mat, dated between 206 B.C. and 8 A.D., was sold for $2.85 million. It initially was priced between $200,000 and $300,000. Even later-day antiquities did well: a blue and white Gu-form porcelain vase, dated around 1664, sold for close to $119,000. Its original price was between $25,000 and $35,000.

Many times the starting bid is artificially low to get more people interested, says dealer Bill Whetstone of Collector’s Research Inc. in San Francisco. “In some cases items will sell with the estimate,” he says, but other times getting more people to bid helps “create a feeding frenzy,” which boosts the price. “The auctioneer is a maestro,” he says.

The little bear that sold for $2.85 million was “an adorable bear, it’s charming, the gilding is well preserved, the quality is good, and there are hair markings.” That attention to detail, its preservation and attractiveness helped raise the price, Bass says. He notes that with Chinese arts that have been around for thousands of years, a buyer “must realize everything is unique, and everything has a soul. You can feel it…especially all the hands it went through.”

Beware of Forgery

One problem in any collectibles area is counterfeits. “Forgeries are scary right now with the quality and quantity coming out," Whetstone notes. "If you don’t know anything about a market, you probably shouldn’t buy it."

Bass agrees counterfeiters “can do some amazing things,” so it can be difficult to spot, especially as Christie’s needs to watch such a large number of categories in Chinese art. “We represent all periods, 400 B.C.…to mid-20th century: jades, bronzes, glass, porcelains, ceramics, furniture, lacquer, textiles, everything.” So his group is made up of specialists in each area. It helps, he says, when pieces come from collections, have been exhibited or written about in a book, and have provenance. “But not everything does, like garage sales items. Then we have to work with our knowledge.”

Van Tress says the latest trend is young Chinese coming to auctions in the United States and buying back the treasures taken from China in the 19th century, and in some cases “much of what they are buying back are fakes their own ancestors sold us,” he muses. “The key is provenance.”

All experts encourage potential buyers to study the collectible area that interests them. Bass says that antiques “are art, and art should be seen as a personal experience … you need to visit auction houses, go to museums, do research, then buy what you love. If you honestly love it, and if it’s beautiful, someone down the road will love it, too.”

---Check out Car Collecting: Beyond Million-Dollar Ferraris on ThinkAdvisor.

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