Sotheby's autumn HK sales drop as China economy slows

By James Pomfret

HONG KONG, Oct 9 (Reuters) - Sotheby's sold HK$2 billion($258 million) worth of Asian and Chinese artwork and luxurygoods in its autumn sales in Hong Kong on Tuesday, a 37 percentdecline from the same period last year as the marketconsolidates on a weaker China economy.

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

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

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

Faring less well, however, were pieces of lesser quality andminor flaws amid more discriminating bidding, with buyersindifferent to some porcelain pieces from even great oldEuropean collections such as the Meiyintang.

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

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

But the market has been dogged by a proliferation of issuesincluding a large-scale Chinese customs probe into tax evasionon art imports that has cooled recent sentiment, while high arttaxes, complex regulations, widespread fakes and marketmanipulation remain tangible risks.

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

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

In Sotheby's contemporary Asian art sales, demand was againpatchy, even for blue chip artists with 27 percent of lots goingunsold, though master works like a 1992 painting by Liu Wei,"Revolutionary Family Series - Invitation to Dinner," made anartist record of $2.24 million, while Indonesian modern artistLee 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 97percent of works sold by lot, including auction favourite,Chinese ink master Zhang Daqian's "Swiss Peaks; calligraphy inXingshu", and Fu Baoshi's "Lady at the Pavilion" that each soldfor HK$23 million.

New Hong Kong auction debutante China Guardian, now rankedamong the world's top four auction firms is shaking up thelandscape in older Chinese paintings, having sold some of themost expensive ink brush paintings in the world in recent yearsincluding Qi Baishi's "Eagle Standing on Pine, 1946" thatfetched 425 million yuan ($57.2 million) in a Beijing sale.

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

Sotheby's, however, recently forged a breakthroughpartnership with a Chinese art firm to enter the mainlandChinese market in Beijing for the first time, which could leadto fully fledged sales early next year and let them take onGuardian in their home base.

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

(Reporting by James Pomfret, editing by Paul Casciato)


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