Art prices have broken their direct link with equity markets for the time being, according to George Herman, a Citadel senior investment strategist. He noted yesterday that equity markets had done well in the third quarter, but the Citadel Art Price index had fallen by 2.6 percent in the period, after rising 10 percent in the second quarter.
The index was launched in 2011, to track the value change of art sold at auction in South Africa. In the past it has shown a close correlation between equity price movements and art prices.
The last quarter broke the trend. The MSCI world index, which captures share price movements in 24 developed markets, has risen 11.6 percent since the start of July, while the JSE all share index is up 14 percent.
But Herman noted that the seven auction houses that compile the index database held only seven auctions among them during the third quarter, which saw only 790 lots sold at a total value of “a mere R13.1 million”. This figure compared with well over a thousand pieces and between R70m and R100m per quarter before.
The most expensive piece sold during the quarter was one by Vladimir Tretchikoff titled The Hindu Dancer.
Herman highlighted trends in China where “major political reform is under way to curb corruption and reign in the habit of gifting. Chinese culture/habits dictate that one thanks the provider of services by way of a gift. The drive to curb the practice has had an enormous effect on all forms of luxury goods.”
However, Chinese art is holding up better than art generally. “Chinese traditional artworks are up 6.2 percent in the year, but works by the old masters are down a whopping 18.4 percent. This reinforces earlier findings that the art world is undergoing an ‘Eastern-isation’,” Herman said.
Black middle class
The rapid growth of the black middle class has attracted local researchers to take a closer look at where this market is located and how it behaves.
Most recently a study by Stellenbosch University found that black people accounted for 41 percent of the middle class in 2012 from 10.5 percent in 1993.
A study entitled Four Million and Rising by Unilever institute professor John Simpson similarly found the black middle class has more than doubled in size over the past eight years.
At the Consumer Goods Council Summit last month in Bryanston, Simpson urged retailers to find inventive ways of tapping into this market.
“The black middle class has overtaken the white middle class in every way and, more importantly, it is changing all the time. It is different today than what it was in 2004,” Simpson said.
Simpson explained that the differences in family structure between black people and white people could affect how and where each respective group spends.
Brands were urged to cater to the different caveats of the black middle class who were broken down into many different categories.
Some of the brands identified by some of the respondents in the survey was FNB and Woolworths.
Woolworths has also recently said that it planned to market more directly to the black middle class.
The Stellenbosch report pointed out that poor education constrained further growth among this group, while Simpson said black parents placed high value on education as the key to climbing out of poverty.
Simpson said ambition and drive separated the black middle class from other groups. It was the “against all odds” outlook that accounted mostly for the increase in the over 4 million group.
The Stellenbosch research found that members of this group were more optimistic about the future, indicating that the group would indeed rise.
Anglo American launched the R500 million Sebenza Fund that will create 8 000 jobs in disadvantaged communities over the next three years.
The fund, which was launched at the fourth annual enterprise development conference in Midrand, Johannesburg yesterday, is a collaboration between Anglo and the government that must be lauded as it addresses the need for creating much-needed entrepreneurs in South Africa.
Most importantly, young people and women who are running start-up businesses will be beneficiaries.
Both the Development Bank of SA and Anglo contributed R250m each towards the fund, which will grant loans at a 6 percent annual interest to the businesses with Zimele – Anglo’s development arm, undertaking surety and ownership of assets until the loan is paid up.
The low interest is more attractive for start-up businesses, as it is lower than that of banks.
If mining companies take the lead from Anglo and channel funds to similar projects, there is likely to be an improvement in employment creation, particularly in the mining areas.
More so, mining companies have suffered reputational damage following the Marikana tragedy and the introduction of job funds is a way in which the companies can give back to the communities.
Anglo has been developing start-up businesses for years through Zimele. The businesses will also benefit from mentoring and training that has assisted in their success.
If the fund is going to have an even greater impact on the communities, focus should be on businesses that can improve innovation, not just hair dressers and funeral parlours. South Africa in general needs more innovative businesses. The discovery by the Council for Scientific and Industrial Research of a technique to digitally control laser beams from within a laser device is a case in point. page 18
Edited by Peter DeIonno. With contributions from Ethel Hazelhurst, Zandi Shabalala and Dineo Faku.