Art Markets’ Susceptibility to Rating Repair

Assets

The professionalization of an asset class can only be achieved with reliable rating offers.

More artworks are offered and traded digitally than ever before. With 24/7 worldwide bidding, “Artnet Auctions” is a leading online-only marketplace for buying and selling fine art. New bidders, buyers, and consignors across categories, geographies, and demographics entrust artnet Auctions with their needs.

Efficiency, digitally native operation, quick turnaround, and continuous sales throughout the year are the strengths of artnet in the industry. The auction platform allows for immediate transactions, with a seamless flow between sellers, specialists, and collectors. Complementing the online auctions, artnet can be considered as a leading resource for researching art online.

Founded in 1989, Artnet’s product suite has revolutionized the way people discover and collect art today. The Price Database contains more than 14 million auction results from 1,900 auction houses dating back to 1985, providing an unparalleled level of transparency to the art market. The Gallery Network platform connects leading galleries with collectors from around the world, offering a comprehensive overview of artworks for sale. Artnet News covers the events, trends, and people shaping the global art market with up -to-the-minute analysis and expert commentary. Artnet AG is listed in the Prime Standard of the Frankfurt Stock Exchange, the segment with the highest transparency standards.

The changes in the art market are picking up speed at a tremendous pace. Changes no longer take place over decades, but rather over years and months. Artnet Auctions provide an example for the market dynamics. Artnet Auctions fee-based revenue increased significantly by 23% to 3.0 million USD in the first six months of 2021, as compared to 2020 (2,423k USD). Following continued record success in the first half of the year, Artnet Auctions has announced several key initiatives and sales in advance of the Fall 2021 season. Artnet starts to offer Non Fungible Tokens (NFT) as part of artnet Auctions fall season sales. “Bridging the gap between the traditional art business and the crypto world, we will be offering a diverse selection of NFT artists this fall,” said Jacob Pabst, Artnet CEO.

How do the transactions work?

True to the business’ belief in ensuring opportunity for transaction and liquidity in the art market at all times, Artnet Auctions is offering a sale of Robert Indiana’s iconic and rare to market LOVE this August. With an estimate of 250, 000 USD to 350,000 USD the all red sculpture from a series of eight will be live for bidding through August 25th – a time that has historically been quiet in the market for works of this caliber. The LOVE sale closes alongside 21st Century Prints, a sale featuring new and old works by widely renowned artists and printer-publishers, such as Banksy, Damien Hirst, and Nicolas Party.

At Artnet Auctions, a second iteration of the “Africa Present” sale, presented in partnership with Africa First founder Serge Tiroche, will go live on August 31, 2021. “This second iteration will additionally be presented in partnership with Latitudes Online, a leading online destination for the African art market. The sale will featu re works by Aboudia, Ablade Glover, Patrick Bongoy, Virginia Chihota and more.”

The experts at Artnet forsee that September will be a strong month for Artnet Auctions, which will feature a number of important sales, including Important Photographs , the category’s top sale of the season. “The sale will feature a work by German artist Andreas Gursky carrying an estimate of 300,000 USD to 400,000 USD. Additionally, works by Irving Penn, Cindy Sherman, and Vik Muniz will be offered within this spectacular sale.”

The role of art ratings

The core idea of every rating is to express a probability of the extent to which the expectations of a buyer or investor are met. While a system of credit ratings and rating agencies has developed for the bond markets over the last century, which, with state authorization and supervision, provides an elementary basis for private, but especially professional investors to make decisions about investments, there are approaches to art rating so far only in its infancy.

There is just as much controversy about the criteria and standards to be used in an art rating as about the suitability of the methodology and models. With the change in the forms of trade, the conditions for pricing also change, because every art market is nothing else than the economic place where supply and demand for art meet. Capturing, ascertaining, recognizing, evaluating and assessing the factors that determine an art rating is an art in itself.

The know-how and the skills to assess the value of art not only for today, but also with regard to its development for the future, are in the hands of comparatively few experts. The knowledge can be found in auction houses, gallery owners, leading collectors and, of course, the artists themselves, to name a few.

However, in order to develop an asset class more broadly and, in particular, to make it accessible to institutional investors who are required to report to their investors and stakeholders, independent ratings are required that express a neutral assessment. Today value judgments can still be found in numerous media and organizations of the art trade as well as museums.

The confusion of all these opinions leads to the formation of opinions by buyers as well as sellers of art. Accordingly, opinions about high, medium or low probabilities of a positive development in the value of art are expressed in a correspondingly little evidence-based manner. In the financial markets, credit ratings are the language used to express the probabilities of default. Stock ratings are used to express buy, sell or hold recommendations. Institutional investors can use this sophisticated system to make rational investment decisions.

The more unprofessional ratings are given, the more likely it is that expectations of art investors will be disappointed. Likewise, art collectors will regret their sale when they quickly realize that they could have realized a much higher price in a short period of time. Avoiding all of these disappointing decisions depends on the availability of efficient art rating systems.

The greatest boom in the art markets is yet to come. If rating systems become available that make the performance of art fund managers comparable and controllable, the art market would make even more financial resources available in the billions.

Art Ratings And Tokenisation Will Feed Artists

Assets, Platforms

A new art tokenisation platform is important news for the art rating industry.

The rating of an artist is the indication that helps evaluate the value of an artwork, the rating of an artwork helps to understand the investment characteristics of art. 360X AG reports the successful completion of first Proof-of-Concept transactions with tokenised art.

There are many people who have experienced the frustration of following a famous artist throughout their early years only to find that the vast majority of their work is financially out of reach. Participation through fractionalisation alleviates this problem, allowing individuals to invest in their favourite artists. Art ratings and tokenisation are the two key ingredients which would enable more people to collect art and make long-term investments, which leads to more artists being able to make a living from their art.

360X Art AG runs a tokenisation platform for art of 360X AG. It announces that it has entered into a strategic partnership with a group of industry leaders in the European art market, Rüdiger K. Weng, Weng Fine Art AG and Johann König. Under the terms of this partnership Weng, WFA and König have invested in 360X Art AG in return for a stake of more than 20%.

Based in Frankfurt, 360X Art AG is a platform that builds and operates a dedicated, trusted digital ecosystem and infrastructure for the digitisation, tokenisation and fractionalisation of both high-quality physical as well as digital artworks. The company is directly connected to the recently announced trading platform of 360X, where digital tokens of art assets and other high-quality investment objects are made accessible, investable and tradable for investors.

The new technology is strongly needed to bring new liquidity, transparency, trust and democratised access to the art market and fine art investments. It could add a new dimension to trading art and will support professional financing structures to initiate future growth of the art market.

white and orange gasoline nozzle

The Key to E-Mobility Lies at the DEFAMA Locations

Assets

In DEFAMA’s way, customers can quickly and conveniently charge their vehicle while shopping.

Together with DEFAMA Deutsche Fachmarkt AG, the energy company EnBW is further expanding the fast charging infrastructure in Germany. The partners aim at letting this happen where customers need it most in everyday life: at retail locations and specialist market centers.

EnBW is equipping three pilot locations of the real estate company DEFAMA with up to eight high-power charging points (HPC) each. With an output of up to 300 kilowatts (kW), these enable charging for a range of 100 kilometers in just five minutes, depending on the vehicle’s equipment. In the medium term, EnBW wants to equip around 30 highly frequented DEFAMA locations with charging stations.

DEFAMA’s portfolio primarily includes locations in small and medium-sized cities in northern and eastern Germany. Even in rural areas, where there are often fewer charging options than in urban areas, fast charging points suitable for everyday use are required when shopping. The expansion of the charging infrastructure at DEFAMA’s properties thus consolidates the nationwide fast charging network in the area.

“Especially in smaller towns, charging infrastructure is a locational advantage for retailers. The possibility of being able to charge the electric car while shopping increases the attractiveness of our retail parks. Our tenants benefit from this,” says Matthias Schrade, DEFAMA board member. “With EnBW, we have an experienced partner at our side,” Schrade continues.

With the partnership, the north and east of Germany in particular benefit from a denser range of fast charging options in the EnBW HyperNetz. “For the mobility turnaround to succeed, e-mobility must also assert itself where the car is the number one means of transport: in the smaller towns and communities, beyond the urban conurbations,” explains Timo Sillober, Chief Sales and Operations Officer at EnBW.

“Here, too, charging has to fit seamlessly into everyday life and very few people can charge at home. We are creating the appropriate public fast-charging infrastructure for this. It is our goal to enable electric car drivers to charge where they are and where the need actually arises. This is often the case in retail, because the loading times of the cars are optimally matched to the shopping time. The partnership with DEFAMA helps us to start right here.”

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First crypto fund ratings in Germany

Agencies, Assets, Methodologies

TELOS GmbH, known for their fund ratings in the institutional sector, and DLC Distributed Ledger Consulting GmbH announce a strategic cooperation in the field of crypto fund ratings.

The aim of the cooperation is to connect two worlds – that of classic asset management and that of digital asset management. On the one hand, the partners want to create more transparency in the crypto market, which is still new and relatively unknown for institutional investors. On the other hand, the qualitative rating should give investors security about the know-how of the fund providers in the management of this asset class.

“In the first step, crypto values ​​such as Bitcoin or Ether will probably find their way into multi-asset strategies, after the inclusion of illiquid assets, among other things, one can speak of ‘multi-asset 4.0’. Many investors are already indirectly already today invests in Bitcoin without knowing it – for example, if they hold shares of Tesla, MicroStrategy or the parent company of Twitter, Square, in their portfolio “, says Alexander Scholz, Managing Director of TELOS GmbH.

The expertise of TELOS as an established rating agency, even in complex fund products, and the in-depth expert knowledge in the field of crypto assets from DLC Distributed Ledger Consulting should complement each other: “We take on the role of technical specialists in the cooperation and also advise on innovative incentive models for digital assets. Specifically, for example, we carry out smart contract audits of the tokens in a fund and in this way significantly increase security for the respective asset manager and, of course, the investor,” says Dr. Sven Hildebrandt, who was employed by a capital management company before DLC was founded.

Both cooperation partners assume that the universe of crypto funds, which is attractive for institutional investors, will increase exponentially. As market participants understand the asset class and its attractiveness in the overall portfolio context (correlation effects, improvement of the Sharpe ratio), questions about practical portfolio implementation and risk management will come to the fore, especially when choosing the right investment product and asset manager.