Chinese entrepreneurs increasingly favouring art investments

Chinese entrepreneurs and investors are increasingly looking towards the world of art and collectibles in order to boost their investment income, according to new data.

The latest government statistics reveal that art is becoming the latest booming asset class, with 2016 sales totalling US$6.33 billion and earning the country the label of the biggest market for art auctions at the end of the year.

Much of this new demand for art investment was reportedly due to slowing stocks, a poor property market and frustrating metal markets, which have prompted many to move away from some of the most popular investment channels and seek new avenues for their funds.

According to the stats, art collection has been thriving for a number of years, as has using art mortgages as a form of investment and the operation of asset allocation and wealth management in the art industry.

In fact, art is reportedly the only asset allocation with long term, stable growth, despite the market being dominated by short term speculative capital.

Further statistics from the 2017 Global Investment Survey show that 74 per cent of Chinese investors have now purchased property, 20 per cent above the average property ownership in Asia, suggesting that this new drive towards art could be working for the industry.

Based on a survey of 15,300 investors across 17 Asia-Pacific, European, Latin American and North American countries, the study also revealed that 28 per cent of respondents were tolerant when it came to high risk investments compared to 36 per cent of Chinese investors, potentially explaining the country's strong move towards an alternative asset class.

The study also revealed that Chinese investors were the second only to Mexico and the United States when it came to optimism in investing, but they were also found to be conservative about their asset allocation, with 88 per cent investing locally.

Despite their behaviour pointing towards future success in the Chinese art market, 68 per cent of respondents were found to have allocated their funds into traditional defensive assets, signalling that the alternative art market may have some way to go in the investment industry. Specifically, it revealed that 23.8 per cent invested in cash, 27.5 per cent invested in fixed-income assets, 10.7 per cent invested in real estate and 6.4 per cent in gold or precious metals.

Looking ahead, the country also sought a more localised and safe approach, with 43 per cent stating they would invest in domestic stocks within the next 12 months, while only 12 per cent sought international stock investment and only 17.2 per cent were considering investment in real estate.

In terms of their investment plan, 56 per cent of Chinese investors have revealed they would use professional investment consultancy services to help them make the correct decisions as alternative markets such as art and collectibles begin to take centre stage. This level of desire to seek professional advice was only second among Asian countries to Singapore.

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