Valuing Malaysian art

HOW low will the ringgit go is the question on everyone's lips, but with an auction on the cards, Henry Butcher Art Auctioneers (HBAA) is hoping the free-falling Malaysian currency will give a much needed boost to the country's art market.

"We have strong support in Singapore and South-east Asia, and now that we've introduced our live online bidding platform, we're hoping to see more buyers," says Sarah Abu Bakar, HBAA's curatorial specialist.

The October auction will see some 111 artworks on the block - Malaysian and South-east Asian paintings - ranging from RM1,000 to RM100,000 (S$330 to RM33,000). It expects to get a better idea of the numbers of bidders in early September, when its full catalogue is listed online next week.

This is their second auction of the year - and all eyes are on how the low ringgit will help Malaysian art sales, which have seen a marked slowdown this year.

"It's the tail end of the boom era for Malaysian art . . . there's no feeding frenzy like in 2013 and 2014," observes Daniel Komala, founder of Larasati Auctioneers, which holds direct or joint auctions in Jakarta, Singapore, Kuala Lumpur and Hong Kong.

The short-lived frenzy was due in part to the proliferation in auction houses in Malaysia - there were four auctions in March alone in Kuala Lumpur - even though the market is so much smaller compared to the Indonesian market, he adds.

The number of auctions simply hastens the end of the party. "In a small market, when you bombard it with tons of paintings while the number of collectors remains the same, there are just too many things to absorb in such a short period of time," notes Mr Komala.

Even so, the market remains solid, he believes. "The only difference now is that people are more careful."

Return of the local investor?

The currency crisis has its advantages, adds Mr Komala. "In fact, the boom in Indonesian art started with a crisis. With the ringgit down in value, this could be a chance for the average collector - professionals in their 30s and above, with savings in Singapore or US dollars - to come into the market," he points out.

The prices of some 80 per cent of Malaysian artists' works haven't risen and won't go up, since art isn't like manufacturing where raw materials make up half the cost. "So I think, for collectors, this is probably a good time to collect very good Malaysian works."

Art is, after all, the hobby of the middle class and higher, he adds.

While the super rich might be affected by the plunging stock market, and have lost millions in USD, professionals with regular salaries may not be so badly affected if they aren't overly exposed to the stock market. "Malaysians working in Singapore, for example, would find that S$10,000 will get them more now," he says.

"People might take a step back on the higher-priced artists, but the middle-tier artists shouldn't be affected that much," says Mr Komala.

Overseas collectors would benefit the most from the fall of the ringgit, as prices will not be raised arbitrarily.

Valerie Cheah of Jada Art Gallery in Singapore, confirms this. "So it's a good time for Singapore collectors to consider buying," she says.

She carries works by Kow Leong Kiang, Chong Ai Ling and Mior Rizuan Rosli, who have not raised prices. "I do a straight conversion of ringgit to Singapore dollars, with some adjustments for freight and other costs." Chong's works range around S$8,000-S$10,000, for example, while Kow's figurative works are between S$12,000 and S$20,000. Kow's work was sold last year at Christie's Hong Kong auction for just under US$28,000.

It's a good time for Malaysian artists in Singapore, she thinks, because of the healthy patronage by Singapore collectors. "For Singapore collectors watching the Malaysian art market, this is a good time for them."

While it looks like a buyer's market for foreign collectors, the Malaysian art market could receive a boost from its own collectors, gallerists note.

"If anything, we are hoping that the lower ringgit encourages Malaysian collectors to buy more local than foreign works," notes Lim Wei-Ling of Wei-Ling Gallery. It could reverse the trend of the past couple of years which saw Malaysian art collectors snapping up foreign art.

"My Malaysian client was upset with the ringgit drop - I just helped him acquire a master which he paid for in the higher US dollar rate," says one Singapore gallerist.

It'll be interesting to see if Malaysian collectors go back to buying local in local currency, notes Richard Koh of Richard Koh Fine Art Gallery. "After all, most other regional markets have a strong local supply and demand. In the last few years, many have been buying foreign, non-Southeast Asian works in US dollars."

Pricing and currency

Still, it might be harder now for Malaysian collectors to collect top Malaysian artists, who are often exhibited abroad and whose works are priced in US dollars or pound sterling.

Wei-Ling Gallery is assessing if its art pricing needs to be adjusted to US dollars to maintain a stable price level. "But we're not implementing it this year, as we need to maintain market prices which are fair to collectors, both within and beyond Malaysia," says Ms Lim.

"If most of the transactions are done within Malaysia, then the currency devaluation should have little or no impact. However, if the ringgit continues to devalue, then it might be prudent (for galleries) to transact prices in USD to maintain previous or international prices," she points out.

Artist Ivan Lam, for example, is already quoted in USD in Malaysia to reflect his global appeal.

Top artist Chang Fee Ming, who had a solo show in London last year by Larasati, has long sold his works in USD, says Mr Komala. So have artists like Ahmad Zakii Anwar and Jailani Abu Hassan, who have a strong overseas appeal.

At Richard Koh Fine Art Gallery, Mr Koh will list artists in USD if their work is mainly shown overseas, or if they don't live in Malaysia.

Nazli Abdul Aziz, founder of Kuala Lumpur-based Galeri Chandan, explains that the value of an artist's work is made up of "commercial and cultural" values that it can command from the market it is trading in. "The sale price is estimated within the acceptable range of a comparable artist in the country and its currency."

When taking artists abroad to international fairs, naturally, the minimum list price will include the costs of participation, price of artwork in Malaysia, plus exhibiting country's premium and sales taxes. But a work listed at RM10,000 wouldn't be listed as S$10,000 in Singapore, because logic and market sentiment wouldn't allow that to happen, he says.

"However, the same artist may be able to command US$10,000 in the US," he adds.

A check on HBAA prices and several gallerists showed that, indeed, prices have largely remained the same as they were in the last auction or earlier in the year.

"There are no major changes in prices," confirms HBAA's Ms Abu Bakar. Consignments were made before the ringgit's downward spiral, so changes can't be made without incurring fees and other charges.

The current economic situation will impact Malaysian artists, who have to pay more for their imported art materials, but find that the tight market doesn't allow them to raise prices. "So unless the works produced are of an amazing quality and priced properly, it'll be hard times for that," predicts Mr Koh.

Malaysia can take a leaf out of Indonesia's art book. Although the market there has been quiet in the last five years, good works are still selling. "Slower, but they still have an audience," says Mr Koh.

Mr Komala concurs. Currency devaluations? "We're so used to it already - what's new in Indonesia?" he quips. "The money is still there, but collectors have become more choosy. It's more a crisis of confidence."

True art lovers and collectors, though, aren't so much influenced by the economy or the currency, gallerists believe. "You don't collect because the artwork is cheap. It's not a product that you buy low and sell high. Purchases are mostly patriotically driven and/or emotionally motivated. Artists produce art because they are wired that way. Galleries promote and sell them," concludes Galeri Chandan's Mr Nazli.

Henry Butcher Art Auctioneers will hold its Malaysian and Southeast Asian Art Auction on Oct 4, 1pm, at the Sime Darby Convention Centre in Kuala Lumpur. A Singapore viewing will be held from Sept 17-20, 11am-7pm, at Artspace@Helutrans, 39 Keppel Road, #01-05 Tanjong Pagar Distripark