‘The painting can be fake, but not the feeling’: an overview of the Vietnamese market through the lens of fake, forgery and copy paintings

A work of Vietnamese art crossed a million-dollar mark in the international art market in early 2017. The event was reluctantly seen as a sign of maturity from the Vietnamese art amidst the many existing problems. Even though the Vietnamese media has discussed the issues enthusiastically, there is a lack of literature from the Vietnamese academics examining the subject, and even rarer in from the market perspective. This paper aims to contribute an insightful perspective on the Vietnamese art market, and hesitantly the Vietnamese art as well, through the lens of fake, forgery and copy artworks. 35 cases of fake, forgery and copy paintings were found on the news and from the experts' wisdom. Through the examples, we argue that the Vietnamese art market is a temporary reaction to the immaturely rising of the Vietnamese art and the economy. Therefore, the art market is unable to function healthily unless the Vietnamese art and the economy developed

War, Inflation, Monetary Reform and the Art Market

During World War II, the art market experienced a massive boom in occupied countries. The discretion, the inflation proof character, the absence of market intervention and the possibility to resell artworks abroad have been suggested to explain why investing in artworks was one of the most interesting opportunities under the German boot. On basis of an original database of close to 4000 artworks sold between 1944 and 1951 at Giroux, one of the most important Art Gallery in Brussels, this paper analyzes, the price movements on the Belgian art market following the liberation. Market reactions following the war are used to understand which motivations played the most important role in investorsÕ decisions. Prices on the art market experienced a massive drop. This huge price decline is attributed to two elements: fear of prosecution for war profits and the monetary reforms set into place in October 1944.Art market, Art Investment, WWII, Belgium, Post-war, Monetary reforms

Art and Money

This paper investigates the impact of equity markets and top incomes on art prices. Using a newly constructed art market index, we demonstrate that equity market returns have had a significant impact on the price level in the art market over the last two centuries. We also find empirical evidence that an increase in income inequality may lead to higher prices for art, in line with the results of a numerical simulation analysis. Finally, the results of Johansen cointegration tests strongly suggest the existence of a long-run relation between top incomes and art prices.Art market;Equities;Income inequality;Cointegration;Comovement

A call on art investments

The art market has seen boom and bust during the last years and, despite the downturn, has received more attention from investors given the low interest environment following the financial crisis. However, participation has been reserved for a few investors and the hedging of exposures remains dificult. This paper proposes to overcome these problems by introducing a call option on an art index, derived from one of the most comprehensive data sets of art market transactions. The option allows investors to optimize their exposure to art. For pricing purposes, non-tradability of the art index is acknowledged and option prices are derived in an equilibrium setting as well as by replication arguments. In the former, option prices depend on the attractiveness of gaining exposure to a previously non-traded risk. This setting further overcomes the problem of art market exposures being dificult to hedge. Results in the replication case are primarily driven by the ability to reduce residual hedging risk. Even if this is not entirely possible, the replication approach serves as pricing benchmark for investors who are significantly exposed to art and try to hedge their art exposure by selling a derivative. JEL Classification: G11, G13, Z1

The Iconic Boom in Modern Russian Art

This paper investigates the prices and the returns in the market for modern Russian art, a prime example of an ‘emerging art market’, over the last four decades. After applying a hedonic regression model on an extensive dataset containing 52,154 sales by 410 Russian artists, we show that the reputation of the artist, the strength of the attribution, and the topic of the work play important roles in the price formation of Russian art, in addition to characteristics such as size, medium and the identity of the auction house. We find a geometric average return of 4.07%, in real USD terms, between 1967 and 2007. Since 1997, however, our Russian art index shows an annualized return of 12.40%, which is roughly double the average yearly appreciation of a global art market index over the same period. Especially nineteenth century Russian art has generated high returns. Based on correlations and Granger causality tests, we conclude that the prices for Russian art are impacted by both Russian and global stock market movements. Our results illustrate how the new wealth created in fast-developing economies has its impact on the market for art from these countries.Alternative investments;Art;Auctions;Emerging markets;Hedonic regressions;Wealth

Tribal Art Market. Signs and Signals

In this paper, we present a model for the marketability of a Tribal artwork and we test this model empirically using a unique hand-collected dataset, which comprises the worldwide Tribal art market auctions between 1999 and 2008. Our results show a significant relationship between the probability of an artwork to be sold and several signs and signals. The effect of the auction estimated prices on the probability of sales is nonlinear, and allows us to divide the Tribal art market into two price regimes. In the low-price regime, the effect of the auction estimated price on the probability of sales is negative. In the high-price regime, the effect of the auction estimated price on the probability of sales is positive.Tribal art, Signs, Signals, Veblen effect, Conspicuous consumption

Constructing the true art market index : a novel 2-step hedonic approach and its application to the german art market

This study develops a novel 2-step hedonic approach, which is used to construct a price index for German paintings. This approach enables the researcher to use every single auction record, instead of only those auction records that belong to a sub-sample of selected artists. This results in a substantially larger sample available for research and it lowers the selection bias that is inherent in the traditional hedonic and repeat sales methodologies. Using a unique sample of 61,135 auction records for German artworks created by 5,115 different artists over the period 1985 to 2007, we find that the geometric annual return on German art is just 3.8 percent, with a standard deviation of 17.87 percent. Although our results indicate that art underperforms the market portfolio and is not proportionally rewarded for downside risk, under some circumstances art should be included in an optimal portfolio for diversification purposes

Are there bubbles in the art market? The detection of bubbles when fair value is unobservable

The purpose of this paper is to look for bubbles in the Art Market using a structure based on steady state results for TAR models and appropriate definitions of bubbles recently put forward by Knight, Satchell and Srivastava (2011). The usual method for investigating bubbles is to measure prices as deviations from fair value. We assess whether it is meaningful to define a fair value of art and conclude that it is very challenging empirically to implement any definition. We then treat fair value as zero in one instance and unobservable in the other case and in both cases provide evidence of bubbles in the art market

Buying Beauty: On Prices and Returns in the Art Market

This paper investigates the evolution of prices and returns in the art market since the middle of the previous century. We first compile a comprehensive list of more than 10,000 artists and then build a dataset that contains information on more than 1.1 million auction sales of paintings, prints, and works on paper. We perform an extensive hedonic regression analysis that includes unique price-determining variables capturing amongst others: the artist’s reputation, the strength of the attribution to an artist, and the subject matter of the work. Based on the resulting price index, we conclude that art has appreciated in value by a moderate 4.03% per year, in real USD terms, between 1951 and 2007. During the art market boom period 2002-2007, prices augmented by 11.60% annually, which explains the increased attention to ‘art as an investment’. Furthermore, our results show that, over the last quarter of a century, prices of oil paintings and of post-war art have risen faster than the overall market. In contrast to earlier studies, we find evidence of a positive masterpiece effect: high-quality art makes a better investment. Our results are robust to alternative model specifications, and do not seem influenced by sample selection or survivorship biases. When comparing the long-term returns on art to those on financial assets, we find that art has underperformed stocks but outperformed bonds. However, between 1982 and 2007, bonds yielded higher average returns (at a lower risk) than art. Buyers of art should thus expect to reap non-pecuniary benefits rather than high financial returns, especially because the modest art returns are further diminished by substantial transaction costs.Art investments;Art market;Art returns;Auction prices;Hedonic regressions;Longterm stock returns;Long-term bond returns;Masterpiece effect