2011 from the AMCI’s viewpoint. [12/20/2011]

In 2011, Artprice’s Art Market Confidence Index hit its all-time high, spent a few days in negative territory and throughout the year accurately reflected the concerns and expectations of art market participants.

At the beginning of 2008, Artprice launched a powerful new tool - the Art Market Confidence Index (AMCI) - to give clients a “real time” appreciation of art market trends and sentiment. During the rest of that year, the index reflected the sensitivity of the art market and its participants to global economic upheaval. The following year, the AMCI accurately reflected the doldrums of a contracting market and in 2010 it was quick to express the recovery in confidence in a market undergoing a number of major structural changes. The AMCI is based on theoretical foundations underpinning the Michigan Consumer Sentiment Index of the Michigan University Survey Research Center, the absolute reference on global markets around the world. In just over two years, the AMCI has become an essential tool in any art market information kit. Tens of thousands of art market players, continuously polled on the Artprice.com website, use this indicator to follow art market trends in real time.

A first semester full of confidence
The first half of 2011 saw lots of new records. With total global Fine Art auction revenue of more than 6.3 billion dollars between 1 January and 30 June, the first half of 2011 was the most dynamic six- month period in art market history. Moreover, during the same period, the art prices climbed 17% to above 2007/2008 levels. It was therefore normal that during H1 2011, the AMCI only once fell below the 20 confidence points level. With hindsight, this 20 point level – reflecting a strong level of art market demand as well as a considerable degree of optimism – is the threshold above which our respondents are effectively expecting art prices to continue rising more or less uninterruptedly.
The only time it moved below the 20 point level was between 15 and 20 March which was exactly when Artprice announced that China had become the world’s leading Fine Art marketplace. As Artprice CEO Thierry Ehrmann said at the time, the news had the effect of an “electroshock” on the art market, and the AMCI dropped 10 points. Several days after the impact of the news, confidence returned and the AMCI settled definitively above 30 confidence points throughout the month of April.
The exceptional sales revenue figures from sales in New York, Hong Kong and Beijing during May and June kept confidence high and it wasn’t until the start of the summer period and the London sales (only “relatively successful” with £30m less than the 2010 combined total) that confidence began to slip.

An up-and-down second semester
It is not surprising, with the summer and debt problems spreading through Europe and the Western world in general, that art market participants should have lost a few points of confidence.
Between 21 July and the 22 August, the S&P 500 lost 17%; over the same period the AMCI fell by 8 points! However, with financial markets continuing to slide through September, (the S&P 500 lost 5%), art market confidence also continued to melt away and the AMCI fell to below zero at the end of the month reflecting not just a lack of optimism, but also a distinct pessimism about the economic outlook and the art market in general. It was the AMCI’s first drop below zero since Q1 2009. At this point, there were fears of a repeat of the end-2008 context (against a backdrop of economic crisis, art prices dropped 30% in just 9 months).
Fortunately, the FRIEZE art fair and then the Paris FIAC managed to reassure the art market. The tremendous success of these two fairs combined with satisfactory auction revenue figures confirmed art’s character as a safe place to park money in times of crisis, impervious to the economic vagaries of Western States.
Although the poor figures from the Impressionist sales somewhat dampened the market's ardour for several days, the success of the Contemporary New York sales and of Chinese auctions has brought the AMCI up to around the 20 point level as the year draws to a close. While the market’s participants have clearly integrated the deterioration of the economic situation, they are still very optimistic about the evolution of art prices and there is currently a strong “purchase intention” within the market.

The year 2012 will be difficult for the global economy, but the art market doesn’t seem to be worried; after all… nearly 50% of its sales are in Asia, and soon, on Internet, they will be considerably better sheltered from European crises and the like…