The year of the AMCI

At the start of 2008 Artprice launched a powerful new tool, the Art market confidence Index, whose objective is to provide clients with a “real time” appreciation of trends and sentiment on the art market.

This confidence index is based on the theoretical foundations underpinning the Michigan Consumer Sentiment Index of the Survey Research Center of the University of Michigan, the absolute reference on global markets around the world. In 2008, our AMCI has demonstrated the very close correlation between art market prices and stock markets.The tens of thousands of market players who participated in our surveys on the Artprice website have adopted the AMCI as an indispensable information tool which not only reflects the ‘current’ state of the market but also anticipates the direction in which the market is heading. Throughout 2008, the fluctuations of the AMCI have reflected the purchase and sale intentions, the forecasts and the mood of art market players around the world in reaction to world events (including stock market fluctuations, economic crisis, geo-political events, high profile auction results, etc.)

The first signs of a stock market meltdown in January 2008 sent the AMCI into negative territory as respondents anticipated the spread of an economic crisis to the art market. After the buoyant results from the February and March sales, the confidence index returned to positive ground. Despite a general 7.5% contraction of art prices over the first three months of the year and highly volatile stock prices, art still maintained its status as a safe haven at the end of the quarter. With stock market indices looking somewhat more stable in March, art market players expressed a greater degree of optimism taking the AMCI from a monthly average of –7.6 points in January to +17.1 points in March (on a scale of –100 to +100) . At the end of the quarter, 63 % of respondents expressed confidence for the three months ahead.

Indeed, they correctly anticipated the exceptional results from the May sales in New York and the June sales in London. The 212 lots sold in May by Christie’s and Sotheby’s generated a record revenue figure of 1.2 billion dollars, reinforcing the market’s optimism. A few weeks later, the euphoria was again clearly manifest in London and the June sales sent the AMCI up to its 2008 peak at +31 points.

Although Artprice’s global art price index showed a 4 point increase at the end of the second quarter, the AMCI, after its mid-June peak, started a regular contraction and had already fallen to +15 points by the end of the first semester. At the same time, Michigan University announced that its consumer confidence indicator had reached its lowest level since 1980 at 59.8 points.

This descent continued through the summer months: on 15 July, the AMCI returned to negative territory as the oil price rose to $140 a barrel and the financial environment continued to deteriorate (1 in every 2 respondent expressed concerns about the “current and future” financial situation). In the middle of the summer, 37% of respondents were convinced that art prices would inevitably contract. This percentage rose to 41% in September and then 58% in November after the debacle of the autumn sales.

On 20 November 2008, the AMCI reached its all-time low, ending the day at –26 points. On the same day, the oil price dropped below the $50 threshold and the dollar fell back to its lowest level against the euro since 25 April 2006. Nevertheless, the year actually ended on a slightly more optimistic note as governments announced their economic stimulus packages and central banks announced interest rate cuts (on 16 December, the FED brought its fed fund rates to within a range of 0 – 0.25%). By the end of the year, any illusions of art market immunity to the crisis were entirely lost. The art market has evolved and has in fact become much more liquid (in the financial sense) and reactive since the beginning of the millennium. It has also become more susceptible to the economic environment.