Does China’s Art Market Investment Really Have High Returns and Low Risks?

Qiao Mingzhe, Fang Yan, Huang Xiangyun, Zhang Weiqian

Journal of Shanghai University of Finance and Economics Vol. 19, Issue 02, pp. 63 - 76 (2017)  DOI:10.16538/j.cnki.jsufe.2017.02.006

Abstract

China’s art market develops vigorously in recent years, and plays a dominant role in the world art market. One of dominant views is that compared with securities investment, China’s art market investment enjoys high returns but bears low risks, which is not agreed by academic researches. Therefore, this paper employs the data from the Artron Art Market Index and Shanghai Stock Market Index from 2000 to 2015 to carry out an empirical research on returns and risks of art market and stock market. It arrives at the conclusions as follows: firstly, the average return rate of China’s art market is higher than the one of the stock market, but is not statistically significant; secondly, the risk level of China’s art market is significantly higher than the one of stock market, but its relative risk level is lower than the one of the stock market; thirdly, there is an insignificant weak correlation between China’s art market and stock market, and risks can be effectively reduced by investment portfolio. The above research findings could help us to understand the returns and risks of art market more comprehensively, and more deeply know risk hedging effect between art market and stock market investments, and different time-lag effects of the two markets upon the impact of money supply expansion more thoroughly.

Keywords

art market; stock market; investment; return; risk