Markets

The fine art of investing successfully

By Chen Jia (China Daily)
Updated: 2011-03-07 14:10

Buying a share of a painting can yield spectacularly high results

BEIJING - It was beyond investors' expectations when the price of Chinese painting Huang He Pao Xiao rose 621 percent in the first month after it was "listed", stealing the limelight from the soaring prices of recently listed stocks on the A-share market.

The price of the painting by famous Chinese painter Bai Gengyan rose to 9.28 yuan ($1.4) a share at Friday's close, more than nine times the price at which it was listed on the Tianjin Cultural Artwork Exchange in January.

No investor would have expected the price to soar so much. It now boasts a market value of 55.68 million yuan. It also managed to raise a total of 6 million yuan by issuing 6 million shares on its trading debut in Tianjin.

Another painting by Bai, Yan Sai Qiu, saw its value rise by 575 percent in the first month.

"Currently more than 300 investors open accounts every day in the artwork exchange, and most of them injected no less than 100,000 yuan to buy their shares," said Wang Mingda, a manager from the marketing department of the Tianjin Cultural Artwork Exchange.

Now in China, artworks can be listed and invested by shares on the electronic trading systems in Tianjin, Shenzhen and Shanghai. The trading is similar to buying and selling shares on exchanges, but the trading limit is 5 percentage points higher than the 10 percent for shares.

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It enables investors who can't afford the sky-high prices of artworks to easily enter the market, analysts said. On its trading debut, the share price of Huang He Pao Xiao soared 103 percent. The rise was 91 percent for Yan Sai Qiu. The shares then nose-dived by the 15 percent trading limit for four consecutive days after the seven-day Spring Festival holiday.

"I don't know much about the art of painting. I'm only seeking some investment opportunities in the market," said artwork investor Xu Jing.

Xu expected a high return rate from investing in artwork shares, an innovative financial product in China. "The first entrant into the market will be more likely to get higher returns, like buying new shares on the startup board ChiNext," she said.

Some speculators are likely to talk up the prices of paintings, said Xuan Jiaxin, a calligraphic and artwork appraisal expert.

Xuan raised concerns about the potential high risks behind irrationally soaring prices, similar to the trading of new shares in the speculation-plagued stock market. China's gloomy stock market and the tightening policies over real estate have pushed money into other high-yield markets. The artwork market will attract more investors as well as speculators in the coming months, according to analysts.