Art Stocks Plunge: Investors Lose Millions, Leaving Only 22 Yuan Behind - The Roar of the Yellow River, Tianjin Culture Exchange
Tianjin Culture Exchange was the "first to eat the crab" in terms of fractionalized trading of art pieces [bulk painting sales], and it has gained some benefits in this process. Data shows that the first batch of art stocks from Tianjin Culture Exchange once surged by 17 times in just a few short months, with a market value breaking through 100 million yuan. However, recently, some investors have suffered heavy losses in investing in the fractional products of Tianjin Culture Exchange. One investor put in 1.3 million yuan but was left with only 22 yuan. These affected investors come from Shandong, Shanghai, and Anhui, and these clients believe there are issues with the trading rules of Tianjin Culture Exchange, which have significantly shrunk their assets.
At the beginning of this year, Tianjin Culture Exchange launched art stocks, listing two works by the painter Bai Gengyan, titled 'The Roar of the Yellow River' and 'Yan Sai Qiu'. In less than a month, their prices soared by 16 times. The market value of 'The Roar of the Yellow River' once exceeded the auction price of works by famous artists like Qi Baishi and Zhang Daqian. Subsequently, Tianjin Culture Exchange was exposed by the media for numerous unreasonable aspects in its establishment and operation, leading to regulatory measures being implemented to cool down the market.
When Tianjin Culture Exchange came back into people's view, the news was about investor losses. In early August, several new artworks listed on the platform broke their issue prices on the first day of trading, with each lot resulting in a maximum loss of 81,600 yuan. Now, the daily trading volume of 'The Roar of the Yellow River' is only in the hundreds of yuan. According to the transaction situation announced by Tianjin Culture Exchange in August, out of 14 art stocks, only two had positive returns, while the rest lost more than 20% in the month.
According to records from Artron Art Network over the years, among Bai Gengyan's total of 656 auctioned items, except for one preview item, 327 were successfully sold, while 328 failed to sell, with an unsold rate of 50%, and the total auctioned amount was 20.198 million yuan. If we consider the standard of auctioned price per square foot, in fact, before 2010, the auctioned price of Bai Gengyan's works almost hovered below 20,000 yuan per square foot, with the lowest price being less than 200 yuan per square foot.
Calculating based on the total share capital of Bai Gengyan's 'The Roar of the Yellow River' and 'Yan Sai Qiu' at 6 million shares and 5 million shares respectively, their "share" values have reached as high as 112.2 million yuan and 92.5 million yuan! Such prices would be enough to buy some exquisite works by famous artists like Qi Baishi and Zhang Daqian.
It is estimated that at the 2010 autumn auction of Guardian Auctions, Zhang Daqian's work 'Taiyi Watching Spring', created in 1947, considered the peak of his classical creation, eventually sold for 40.32 million yuan; Qi Baishi's work 'Four Screens of Flowers and Fruits', under the enthusiastic pursuit of many collectors, sold for a high price of 47.6 million yuan. Clearly, the price of 'The Roar of the Yellow River' does not conform to market norms. It is understood that due to the lack of authoritative art appraisal and evaluation institutions domestically, the valuation of artworks has become an issue.
Regarding why the listed artworks on Tianjin Culture Exchange deviate so much from market prices, someone helplessly said, it can only be evaluated as "everyone thinks its future valuation potential is huge." "The only reason the price can skyrocket is because everyone passes the hot potato in circulation, purely speculative trading," commented Liu Jipeng, director of the Capital Research Center at China University of Political Science and Law, who vividly compared it in a Weibo post: "For example, if there's a stone on the ground, we can auction it and say how much it's worth. I only consider whether someone will buy it after me today. I no longer consider its inherent securities attributes and value issues. As long as someone is dumber than me, I can be that fool."
"The lawsuit document is ready, after the National Day holiday, we will officially file a lawsuit against Tianjin Culture Exchange," said Wu Shaohui, director of Beijing Bangdao Law Firm. He plans to sue Tianjin Culture and Art Exchange for failing to adequately warn of transaction risks in the standard contract.
Previously, Wu Shaohui revealed that the Contract Law is the foundational law in economic activities. Tianjin Culture Exchange has violated the provisions regarding standard contracts in this law, providing standard contracts when investors enter but failing to adequately warn of possible risks in fractional transactions. Wu Shaohui stated that currently, 15 lawyers are involved in the rights protection activities against Tianjin Culture Exchange, with seven or eight affected investors. Additionally, Zhengzhou Culture and Art Exchange is also included in the lawyer's rights protection list. It is reported that some customers invested 1.3 million yuan and lost tens of thousands; others invested 200,000 yuan and were left with only tens of thousands; even worse, someone invested 1.3 million yuan and now has only 22 yuan left. Some insiders mentioned that an investor from Huzhou, Zhejiang, put all his family savings into purchasing fractional products from Tianjin Culture Exchange, borrowed some high-interest loans, opened five or six accounts for purchases, totaling over 1.2 million yuan. Now, the purchased products have severely depreciated, leaving only more than 600,000 yuan. Some netizens jokingly remarked: "Winning a lottery ticket is like getting stabbed."
It is claimed that this litigation is not targeted at any specific cultural exchange or individual, but rather at the trading rules. While protecting investors' rights, it is hoped that the cultural exchange industry can develop healthily, truly achieving openness, fairness, and regularity.
Nowadays, such cultural exchanges are spread throughout various places in the country. From the original intention, the idea of fractionalized trading of cultural art pieces is good, with precedents abroad, and it is undoubtedly beneficial for activating the cultural art piece market. But (since cultural exchanges have sprung up everywhere, disputes have continued, and various doubts have arisen), mainly focusing on art appraisal and evaluation.
According to statistics, by the end of June this year, the number of domestic cultural exchanges had already exceeded 20. By July 31st, the total number of cultural exchanges that had opened or were in preparation nationwide reached 36, with 21 already open. After entering August, Han-Tang Art Exchange, Fujian Strait Cultural Art Exchange, Jiangxi Cultural Art Exchange, and others successively opened or were established. Due to rushed launches, some cultural exchanges were found to still be under renovation for their basic office premises. Industry insiders revealed that there are still many cultural exchanges being prepared across the country. It is expected that by the end of 2011, the total number of national cultural exchanges will reach or exceed 50. Although the amount involved in this case is negligible compared to the total amount of fractionalized art trading across all cultural exchanges nationwide, it is sufficient to serve as a "cooling" effect on fractionalized art trading, prompting various cultural exchanges to re-examine the loopholes in their cultural art trading.
Wei Pengju, executive dean of the Central University of Finance and Economics Creative Cultural Industry Research Institute, said in an interview with the media: "The rapid emergence of cultural exchanges in various places is directly related to the craze of Tianjin Culture Exchange, and their later development models will also emulate Tianjin Culture Exchange. Therefore, this case will make other cultural exchanges take heed, placing greater emphasis on the perfection and stability of their rules."
[Link]
Risks Coexist with Interests: Many Failed Cases
After the initial crazy speculation, according to data provided by the Tianjin Culture Exchange website, by September 23rd, the first batch of art shares of Tianjin Culture Exchange had fallen from a high of around 18 yuan to more than 3 yuan.
According to the "China Art Market White Paper" statistics for the first half of 2011, the spring auction turnover this year has already broken through 5 billion yuan RMB, with a total turnover reaching 5.08 billion yuan RMB. The autumn auction turnover is expected to be around 5.5 billion yuan RMB. That is to say, the annual turnover of the Chinese art auction market will break through approximately 10 billion yuan RMB. In recent years, despite the impact of the financial crisis, the Chinese art market has been thriving, with the physical prices of all kinds of artworks hardly falling. From antiques and paintings to jade and porcelain, prices have been rising all the way.
However, risks coexist with interests. In the history of foreign art funds, there have been multiple cases where investments ended in failure. In the late 1980s to early 1990s, the Paris National Bank invested 22 million US dollars to purchase 16 French and Italian paintings and sketches. Seven years later, the bank sold the art pieces in its investment portfolio, but unfortunately, the final total sale price was 8 million US dollars less than the purchase price.
In addition, New York Chase Bank issued an art fund worth 300 million US dollars, Morgan Stanley Investment Group released an art investment fund worth 25 million US dollars, and a Japanese consortium invested 520 million US dollars to purchase 7,300 Western modernist and impressionist paintings. However, the investment funds of these three companies suffered severe losses.
Art, from being coldly ignored to being wildly popular, began to be packaged into financial funds, even fractionally... Tianjin Culture Exchange's 'The Roar of the Yellow River' once set a record of increasing by 1,870% over the issue price in 18 trading days. Art, slowly tumbles in the realms where capital can reach.
Tianjin Culture Exchange was the "first to eat the crab" in fractionalized art trading and achieved certain gains in this process. However, recently, due to modifying the trading rules, Tianjin Culture Exchange will face a legal crisis.
This article was originally published on [Bulk Painting Sales · Xianyunxuan] http://www.xyx-gy.com. [Bulk Painting Sales · Xianyunxuan] specializes in the creation of painting and calligraphy crafts, operating bulk painting sales, Buddhist beads sales, Buddhist bead bracelets, landscape paintings, bulk Chinese painting sales, Chinese calligraphy, brush calligraphy, and other high-quality artworks and hand-carved wooden items. Professional quality, trustworthy, welcome to discuss cooperation. For more detailed content, please visit the official website: http://www.xyx-gy.com! Related thematic articles: Calligraphy is the Great Art Treasure of the Chinese Nation (Part Four) Art Trusts Gain Popularity