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Market Update: Liv-ex 100 posts gains in January - 2nd February 2012
By Tom Gearing (Director of Cult Wines Ltd) - http://www.cultwinesltd.com


Tom Gearing - Cult Wines LtdConfidence tested

2011 will be remembered as ‘Annus horribilis’ for the wine market as the Liv-ex 100 (the industry leading benchmark) posted losses of 14.85% for the year following 6 months of sharp declines. The ‘market correction’ took many by surprise, due to the scale and pace at which it reduced market prices.

Investors, collectors and wine merchants looked reflectively at the market over the quiet Christmas period and many returned with a bullish outlook, renewed confidence and predictions of gains in 2012. (We included in our Outlook 2012).

In the first couple of weeks of January, the Liv-ex 50 which provides the market with a daily movement on prices, showed erratic if not more positive signs following the 3.90% drop in December. At the same time, the Hong Kong fine wine auction season was getting underway and with mixed results from the top houses – the renewed market confidence was being tested.

Increased trade as reported by Liv-ex as well as renewed interest in the first growths was coupled with strong auction performance by Burgundy in Asia. The 2010 Burgundy En Primeur campaign provided more than just light relief, as unequivocal praise was lavished on the wines produced.

Our research team was in similarly reflective mood in January and our own buying strategy has been scrutinised immensely within these changing market conditions. A nod to continued diversification, searching out value as well as assessing the prized assets from Bordeaux’s 09/10 vintage have been the order of the day.


Positive Month End results

The Liv-ex 100 (the industry benchmark index) posted its first monthly gains since mid-2011, rising 1.39% in January. The air of renewed confidence can be palpably felt. The market remains sensitive however and anyone but a raging bull will take the news with caution.

February it seems will be a decisive month in showing us whether the corner has truly been turned. The feeling is that the ‘bottom’ of the market has been found and while 2010 gains of 40%+ are unlikely in the foreseeable future, it is anticipated that growth will remain on a more sustainable upwards curve of c. 15% per annum.

No-one wants to catch a falling knife. So for those investors and collectors, who were understandably apprehensive, take the new market data as a strong sign that now is the time to buy.

To explore opportunities or to discuss the wider market, feel free to get in touch today.



 

     
 
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