Art attack: Pandemic will have lasting effect on creative markets

Art attack: Pandemic will have lasting effect on creative markets
Big name galleries, auction houses and exhibitions like Art Basel adjusted to the new normal, (File/AFP)
Short Url
Updated 24 January 2021

Art attack: Pandemic will have lasting effect on creative markets

Art attack: Pandemic will have lasting effect on creative markets
  • Big name galleries, auction houses and exhibitions like Art Basel adjusted to the new normal

BERN: Even the high-end art market was less frothy in 2020 than 2019 due to restrictions placed on galleries, auctioneers and collectors by the coronavirus disease (COVID-19) pandemic.

Still, fine art remained big business and sold well. The top 10 sales at auction fetched a total of $453 million. In that group, only two paintings exceeded the $50 million mark in 2020, while nine out of the ten lots topped $50 million in 2019.

The numbers may be smaller but they are eye-watering nonetheless. Even pop art sold: A drawing by Belgian artist Herge depicting his character Tintin sold for $3.1 million at auction earlier this month — the highest price ever paid for comic book art.

Big name galleries, auction houses and exhibitions like Art Basel or Miami adjusted to the “new normal.” Sales at auction houses went online, and viewing experiences, as well as auctions, were enhanced by augmented reality and super-zoom technology.

Telephone bidding had become ingrained in the auction process for some time, but COVID-19 pushed the virtual presence further. A trend that would have taken place over time anyhow was accelerated by the pandemic.

HIGHLIGHTS

The top 10 sales at auction fetched a total of $453 million.

A drawing by Belgian artist Herge depicting his character Tintin sold for $3.1 million at auction earlier this month.

Sales at auction houses went online, and viewing experiences, as well as auctions, were enhanced by augmented reality and super-zoom technology.

The eastward shift of economic power was also pronounced. Hong Kong replaced London as the second biggest market for high end auctions. According to ArtTactic, the city state’s market share in 2020 auctions was 23.2 percent up 5.7 percent from 2019. New York remained the dominant force with 41.6 percent.

A further trend which was exacerbated by the lockdown throughout the world was that buyers increasingly see luxury on par with art. The Boston Consulting Group noted that the auction market for second hand luxury goods achieved a total value of $23 billion — growing by 8 percent per year.

The above makes eminent sense, as investors are scrambling to find a store for value amid historically low interest rates. The Financial Times listed several alternative investment categories while money is trying to find a home amid low returns, including everything from whisky to one’s own backyard. High-end art also has a place on that list.




Even the high-end art market was less frothy in 2020 than in 2019 due to restrictions placed on galleries, auctioneers, and collectors by the coronavirus disease (COVID-19) pandemic. (AP)

Like in the music world, the art world is also bifurcated. On the one hand, there are big-ticket investment pieces and the big auction houses, galleries and exhibitions who all successfully went online, and whose affluent buyers are eager to diversify their investment portfolios while returns are hard to come by.

But on the other hand, there are the smaller galleries and lesser-known artists who are struggling. They might have gone online, too, but have not found the resonance of their high-end colleagues. Worse, in many countries, there are no pandemic schemes for artists. They do not receive compensation for lost revenue comparable to employed workers, who can avail themselves of furlough schemes.

This holds true even in very affluent markets. In Switzerland for example, 50 percent of all galleries may face closure according to Heidi Leupi, who together with her husband runs Leupi Art, the market-makers for Middle Eastern art in the Alpine country.

This is a grim outlook, and it matters for the art market in the long run. Artists evolve; they are not born with the fame of a Damian Hurst. It takes the nurturing of these smaller galleries and their clientele to tease out who the next big name will be.

Anybody in business can tell you that succession planning is critical for companies, and with it, the markets they make up. If we believe in that axiom, we need the smaller galleries to give the many a chance to become high earners. The art market will be a lot poorer without the opportunities that segment provides for up-and-coming talent.

  • Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources. Twitter: @MeyerResources

Theeb Rent-a-Car to list 30% of shares in IPO this month

Theeb Rent-a-Car to list 30% of shares in IPO this month
Updated 52 min 40 sec ago

Theeb Rent-a-Car to list 30% of shares in IPO this month

Theeb Rent-a-Car to list 30% of shares in IPO this month

RIYADH: Theeb Rent-a-Car, a Riyadh-based car rental company, plans to float 30 percent of its share capital in an initial public offering (IPO) later this month.

The company issued an IPO prospectus last month to the Saudi Stock Exchange (Tadawul), in which it outlined the many factors that enable it to compete with its current and potential competitors and the factors it sees for its future growth.

The Saudi Capital Market Authority (CMA) last October approved Theeb’s request to offer a 30 percent stake as part of its IPO, representing 12.90 million shares on Tadawul.

The company’s strategy is to continue seeking growth in the car rental services sector by opening new branches, whether at airports, inside cities, or in new mega projects in which the need for car rental is likely to increase.

According to Argaam, Theeb Rent a Car reported a net profit of SR41.9 million ($3.97 million) for the first nine months of 2020, an increase of 8 percent on the same period in 2019.

Short-term leasing accounted for 44.8 percent of revenue, followed by long-term leasing (30.2 percent) and used car sales (25 percent).

Offering daily, weekly and monthly rental services, it operates through 48 outlets across the Kingdom. With 264,131 customers as of March 2020 – a 3 percent year-on-year increase – Theeb has an 8.8 percent share of the short-term car leasing market. It competes with the likes of Al WAFAQ, with a 6.9 percent market share, followed by Budget Saudi (6.9 percent), Arabian Hala (4.6 percent), Key Car Rental (3.5 percent) and SEERA (3.2 percent).
 


Own goal? Shaky finances ruin China’s dream to be a global football power

Jiangsu FC on Sunday said they had
Jiangsu FC on Sunday said they had "ceased operations" — just three months after winning the Chinese Super League. (AFP/File Photo)
Updated 02 March 2021

Own goal? Shaky finances ruin China’s dream to be a global football power

Jiangsu FC on Sunday said they had "ceased operations" — just three months after winning the Chinese Super League. (AFP/File Photo)
  • Jiangsu FC on Sunday said they had "ceased operations" — just three months after winning the Chinese Super League

SHANGHAI: Five years ago, China under President Xi Jinping pledged to become a football power by 2050. But the financial collapse of the newly crowned Chinese champions raises fresh questions over that lofty goal.
Jiangsu FC on Sunday said they had "ceased operations" — just three months after winning the Chinese Super League — in a move described as "shocking" by state media.
After rushing in to curry favour with Xi and the Communist Party, burnt investors are retreating again and last year 16 teams pulled out of Chinese football. More are set to follow.
It is a far cry from when the Super League broke the Asian transfer record five times in less than a year, culminating in Chelsea midfielder Oscar joining Shanghai SIPG for 60 million euros in January 2017.
Argentine striker Carlos Tevez was lured by Shanghai Shenhua in the same transfer window on reported wages of 730,000 euros a week, the highest in the world.
But state-run Xinhua news agency said this week that soaring salaries and transfer fees, as clubs vied to outspend each other, had created "a bubble" that is now bursting.
Citing Chinese Football Association statistics, Xinhua said average expenditure in the 2018 season for the Super League's 16 clubs was about 1.1 billion yuan ($170 million), against average income of 686 million yuan.
"The CSL club expenditure is about 10 times higher than South Korea's K League and three times higher than Japan's J-League," CFA president Chen Xuyuan said in December, when salary caps were announced.

Journalist Ma Dexing said that in 30 years covering Chinese football he has seen more than 200 clubs close, indicating a wider problem beyond the current crisis and the coronavirus pandemic, which delayed the Super League for months last year and forced it behind closed doors.
Tianjin Tigers, a Super League mainstay since its founding in 2004, are expected to dissolve within days and Hebei FC's parent company is drowning in debt.
"The fundamental reason is that the foundation of Chinese professional football is too weak," Ma, who has 1.5 million followers on China's Twitter-like Weibo platform, wrote in a column.
Clubs are built and run by companies which have little connection to the communities where they are based, Ma explained.
"Therefore the survival of China's professional clubs directly depends on the economic situation of the enterprise or company," he wrote.
"Once the company or enterprise has problems, the club ceases to exist."
That's what happened to Jiangsu FC, who were until recently called Jiangsu Suning, named after their backers.
The Suning conglomerate, which also owns Serie A leaders Inter Milan, is in financial peril and has cut the team loose.
A recent CFA order for clubs to drop sponsors from their official names -- supposedly to help foster a deeper footballing culture -- was the "last straw" for some investors, the Beijing News said.

Speaking to AFP last year, CFA secretary-general Liu Yi said a healthy Super League was central to China's football ambitions, which include hosting and even winning a World Cup.
Concerned about clubs' high spending and the lack of opportunities for Chinese players, the CFA imposed a 100 percent transfer tax in 2017 on incoming foreigners, plus recent salary and investment caps.
The Shanghai Observer said clubs must abandon single-owner models in favour of multiple stakeholders including "government, enterprises, communities and even individuals".
"Super League clubs cannot only rely on blood transfusions from their parent company but must attract more sponsorship, match-day income (and improve) transfer market operations, etc.," it said in an opinion piece.
Liu told AFP that China remains committed to its ambitious long-term plans, pointing out that foreign stars including Oscar, Paulinho and Marouane Fellaini remain in the Super League.
But the short term is uncertain.
A more frugal Super League is expected to kick off in the spring but with coronavirus concerns persisting, the CFA is yet to announce a start date. Given Jiangsu and Tianjin's problems, it's also unclear which teams will be involved.
Meanwhile, the men's national side has moved up just five places in the FIFA rankings since China revealed its football dreams in 2016. They are now 75th, just above war-ravaged Syria.
China has reached only one World Cup, in 2002, when they failed to score a goal or win a point in their three group games.


Aramco CEO sees improvement in demand for oil in 2021 

Amin Nasser, president and chief executive of Saudi Aramco. (CERAWeek)
Amin Nasser, president and chief executive of Saudi Aramco. (CERAWeek)
Updated 02 March 2021

Aramco CEO sees improvement in demand for oil in 2021 

Amin Nasser, president and chief executive of Saudi Aramco. (CERAWeek)
  • Amin Nasser also warns certain job types might not return after ‘biggest crisis in a century’
  • Current oil demand is at 94 million barrels, compared with pre-pandemic levels of 100 million

DUBAI: Amin Nasser, president and CEO of Saudi Aramco, sees an improvement in demand for oil this year, especially in the second half, but he is worried about the risk of a “jobless recovery” for the global economy.

Speaking virtually at CERAWeek, an annual energy conference organized by the information and insights company IHS Markit in Houston, Texas, Nasser said there has already been “quite an improvement” in oil demand compared to the drastic reductions during the pandemic lockdowns last year, especially in China and East Asia. 

“Indian demand is almost the same as pre-COVID,” he told oil market expert Daniel Yergin.

“There has been an impact that we see in the West and the US. But with the rapid deployment of vaccines, we are seeing good cause for optimism and recovery in demand.”

Current oil demand is at 94 million barrels, compared with pre-pandemic levels of 100 million, and Nasser expected this to rise to 99 million barrels by the end of the year. 

“I see demand and the market improving from here, especially in the second half of this year,” he said.

But Nasser said he expected “harsh realities” as a result of the economic damage from the pandemic, which he described as the “biggest crisis in a century” for the oil industry.

“There has been a huge impact on small- and medium-sized businesses, and more on employment,” Nasser said. “Rapid technology advances were already having an impact on jobs, especially low-skill repetitive-type jobs, reducing jobs and creating inequality in the market in different parts of the world.

“Today we are seeing a recovery taking place and usually this is linked to job creation and higher employment. My big worry over the long term is a jobless recovery where certain jobs are not going to return.”

Nasser said Aramco, the world’s biggest oil company, used risk-management systems to help it respond quickly to the pandemic, which also significantly accelerated its use of digital and remote operating processes.

During the same CERAWeek forum, the CEO of US energy firm Chevron Corp., Mike Wirth, said the key lesson learned from the crisis was the “essential nature” of the oil business. 

Despite the unprecedented shock to oil markets, he said demand destruction only amounted to about 9 percent: “This demonstrates how important our industry is to the world economy.”


Saudi Aramco, Chevron chiefs see global oil demand recovery

Saudi Aramco, Chevron chiefs see global oil demand recovery
Updated 02 March 2021

Saudi Aramco, Chevron chiefs see global oil demand recovery

Saudi Aramco, Chevron chiefs see global oil demand recovery
  • Amin Nasser says global demand could reach 99 million barrels per day in 2022

Global oil demand is recovering and could return to around pre-pandemic levels next year, the chief executive of Saudi Aramco told an oil and gas conference on Tuesday.
Global demand for oil is likely to recover from the second half of the year and could reach 99 million barrels per day (bpd)in 2022, Amin Nasser said at IHS Markit's online CERAWeek conference.


Diesel demand has recovered globally due to door-to-door deliveries, though jet fuel lags as people avoid long flights, said Chevron CEO Michael Wirth, who spoke on a panel with Nasser.
Oil demand improving in China, India and East Asia, with vaccine deployment as "cause for optimism" in the West, Nasser said.


OPEC says general oil market outlook is positive as energy industry gathers

OPEC says general oil market outlook is positive as energy industry gathers
Updated 02 March 2021

OPEC says general oil market outlook is positive as energy industry gathers

OPEC says general oil market outlook is positive as energy industry gathers
  • Resilient Asia supports oil demand
  • OPEC+ to meet on Thursday
LONDON: OPEC sees the oil market’s outlook as positive in general and the uncertainty that dominated last year is easing, the group’s secretary general said.
“This is a major turnaround from a year ago,” Mohammad Barkindo was quoted as saying on Twitter on Tuesday.
He added that positive global economic developments and resilient demand in Asia were encouraging.
Barkindo spoke ahead of joint technical committee (JTC) meeting for the Organization of the Petroleum Exporting Countries and its allies led by Russia, a group know as OPEC+.
The JTC reviews oil market supply and demand balances as well as compliance of members of the alliance with the agreed cuts.
“It looks good and healthy,” an OPEC delegate said, referring to the latest supply and demand balance for 2021.
“But there are still some thoughts to be cautious,” he added.
Oil company executives at CERAWeek by IHS Markit said that crude demand will rise over the coming decade and that the fossil fuel will remain a crucial part of the energy mix even as renewables draw increasing attention.
Climate change and renewable fuels are taking center stage at this year’s gathering of energy leaders, investors and politicians from around the globe, with oil companies trying to reorient their portfolios after the coronavirus pandemic eroded demand and caused the loss of thousands of jobs.
The industry scaled back investments and cut budgets as prices crashed in 2020, but investments are likely to rebound by next year, said Lorenzo Simonelli, chief executive officer of oil services company Baker Hughes.
“Hydrocarbons are still going to be essential for providing energy to the world,” Simonelli said. “Especially as you look at the near-term future.”
Oil demand may continue to climb over the next decade even as countries work to comply with the Paris climate agreement’s goals for cutting emissions, said Hess Corp. CEO John Hess.
“We don’t think peak oil is around the corner — we see oil demand growing for the next 10 years,” said Hess.
“We’re not investing enough to grow oil and gas in the future,” he said, saying that prices would need to rise to support that investment.