Business News

CCTV Script 12/11/15


– This is the script of CNBC's news report for China's CCTV on November 12, Thursday.

Welcome to CNBC Business Daily, I'm Qian Chen.

The billionaire founder of a Shanghai museum paid $170.4 million for an Amedeo Modigliani nude at Christie's in New York on Monday, carrying a night in which global art buyers focused their attention on a few masterworks but left other lots unsold.

In all, some 80 percent of the 400 lots on offer sold for 110.26 million Swiss francs, Christie's said, eclipsing expectations.

Christie's, founded in 1776, is now owned by French retail magnate Francois Pinault's holding company Artemis SA.

After the financial crisis, for auction houses, sales are on a raise.

Last year, Sotheby's, Christie's major competitor, sales reached $52 bn, a multi-year high and raised $3.5 billion for the first half of this year, according to data provided by its press office.Together, Sotheby's and Christie's control 42 percent of the world's art auction market.

This year's first-half sales figures, for Christie's, are $4.5 billion. However, auction commission margins are falling.

As you can see the trend, auction commission margin for Sotheby's have been going lower, falling to 14.9% last year. On Aug. 7, Sotheby's announced adjusted half-year net income of $80.5 million, compared with $84.9 million for the equivalent period a year earlier.

Analysts told me that typically, auction commission margins are higher for lower value works of art or collections, while higher valued property earns lower margins. In certain situations, auction commission margins are adversely impacted by arrangements whereby auction commissions are shared with consignors or with the Company's partners in auction guarantees.

Many of the works had not come to market in years, making them more attractive to buyers.

The Modigliani had not appeared on the open market for 100 years, Christie's Mr Pylkkanen said after the sale. He added that he did not see it as a bad thing that some works had failed to sell: "If they'd all sold we wouldn't be pushing the envelope," he said. As for the $28mn pink diamond, in almost 250 years of auction history, only three pure vivid pink diamonds of over 10 carats have appeared for sale, according to Christie's.

Richard Feigen, a dealer, said after the sale, that contemporary and modern art "has become a parking lot for money" as central banks' policy of keeping interest rates low has inflated asset prices. If those policies change course, "it may dampen the market".

Brett Gorvy, Christie's chairman, said the auction house's second "curated" sale, which crosses genre and period to unite works under a single theme, was assembled over the summer amid volatility in financial markets, so it was "very, very important to see how strong" the market was for works over $100 million.

CNBC's Qian Chen, reporting from Singapore.

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