Hong Kong’s Art Auctions Declined in the First Major Slate of Sales Since Political Protests Engulfed the City

Ignited in June by a
(since-withdrawn) bill that would allow extradition to mainland
China, the ongoing political protests in Hong Kong have escalated
into a struggle over the future of democracy there. Clashes between
activists and police seem to have engulfed all aspects of life in
the special administrative region, including commerce. And while
the state of trade ranks far down the priorities list from the
well-being of residents and visitors alike, Hong Kong’s nascent
status as an art-market hub has left dealers, auction houses, fair
organizers, and artists wondering what impact the unrest might be
having on their livelihoods. 

No one among this group has been
more bullish about Hong Kong’s future than the auction sector.
Christie’s recently announced that it would hold a new sale of 20th
century and contemporary art in March 2020 to sync with the next edition of
Art Basel Hong Kong (which fair
officials say will continue as planned). Last week, Sotheby’s also released a report
touting the $208 million in contemporary-art sales achieved by its
Hong Kong branch in 2019 as “the strongest year in Asia’s
history.” 

But while the fanfare might lead
you to believe that results in Hong Kong’s auction houses were
never better than during this fall, which saw the first major slate
of fine-art sales since the start of the protests, the data says
otherwise. 

Fine-art sales in Hong Kong
totaled roughly $661 million this fall, down about six percent from
the nearly $702 million achieved during the equivalent period in
2018, after adjusting for inflation. The number of lots sold
dropped even more sharply, from 3,908 last fall to 3,199 this
year—a slump of about 18 percent. 

Since correlation is not
causation, it’s difficult to know how much, if any, of these
results stem from Hong Kong’s political unrest. But it is worth
noting that this is in fact the second straight year of decline in
both metrics. 

Sales value and lots sold in the
period from September through November each peaked in 2017, with
4,230 works together bringing in roughly $715 million. Both figures
declined modestly in 2018, then more aggressively this fall. These
additional data points suggest that the volatility on the streets
of Hong Kong may only have amplified a cooling effect already in
progress. 

Are Auction Houses Misreading the
Signals?

It’s important to keep
perspective on these results. Fine-art sales in Hong Kong’s fall
season have now orbited around the $700 million mark for three
straight years. That is a colossal victory even compared to the
roughly $423 million achieved in the same period back in 2015, a
year before Phillips held its first major sale in the
region.

The $41 million ebb in sales
value between fall 2018 and fall 2019 also cries out for context.
This year, Chinese-French modernist Sanyu’s Five Nudes (ca. 1955) sold for just shy of $39 million at
the 20th century and contemporary art evening sale held by
Christie’s Hong Kong in November, while Sotheby’s Hong Kong
shattered Yoshitomo Nara’s
world auction record by selling his painting
Knife Behind Back
(2000) for $25 million a month
earlier. One or two more paintings of similar quality could easily
have pushed this fall’s results above those achieved in
2018. 

Sales for 2019 year-to-date
remain encouraging, too. Fine art had brought $1.37 billion into
Hong Kong’s auction houses in 11 months—just
$12.6 million less than in all of 2018, after adjusting for
inflation. Last year’s total ($1.39 billion) also qualified as a
record for the region.

Still, the point is that this
fall’s modest retrenchment—which coincides with unrest in the
region—looks to be the main reason 2019 as a whole won’t soar much,
if at all, above the previous year’s results. It would also be
unwise to write off the 18 percent year-over-year decline in lots
sold between fall 2018 and fall 2019, which show that there is less
transacting happening across the board, not just on the top lots.
Together, these figures suggest a broader-based chill has crept
into Hong Kong’s auction houses. 

We need more data to determine
whether this is simply normal season-to-season fluctuation that
reflects the broader quieting of the market worldwide, or a deeper
effect of the political and economic volatility that the region has
been experiencing since June. But based on the fall season, no one
should dismiss the latter possibility out of hand.

Methodology: This article
examines sales at fine art auctions held from September 1 through
November 30 at all auction houses in Hong Kong between 2015 and
2019. An important caveat: These figures reflect winning bids, but
late payments and outright defaults continue to be major challenges
for the Chinese art market, so results may not always reflect
completed sales. All sales values are denominated in US dollars,
include buyer’s premiums, and have been adjusted for inflation. All
data comes courtesy of the artnet Price
Database and artnet Analytics
Reports.

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Major Slate of Sales Since Political Protests Engulfed the City
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