Domestic Art Auction Market Booms... Seoul Auction's Stock Price Doubles This Year

[Asia Economy Reporter Park Jihwan] The stock price of Seoul Auction, an art auction company, has more than doubled since the beginning of this year.

According to the Korea Exchange on the 8th, Seoul Auction's stock price jumped from the 7,000 won range at the start of the year to the 15,000 won range as of the previous day. This is due to expectations that the domestic art market is clearly improving its performance as it fully recovers from the impact of COVID-19. Seoul Auction has been on a downward trend since achieving its highest sales of 62 billion won in 2018, with sales dropping to 45.1 billion won in 2019 and 28.9 billion won in 2020. One of the main auctions, the Hong Kong auction, saw a decrease in auction sales due to the Hong Kong protests that began in the first half of 2019, and last year, the impact of COVID-19 led to only one offline auction being held annually. The domestic art auction market also saw a decline in total auction sales due to the issue of strengthening capital gains tax on artworks that emerged from the end of 2019, causing the average auction total, which was previously around 7 billion won, to plummet to about 5.8 billion won.

However, this year, amid a liquidity-driven market, large-scale capital movement into artworks, the resolution of the capital gains tax issue, and the influx of younger buyers have combined to improve market conditions. In February, at the first major domestic auction, Seoul Auction recorded a total auction amount of 11 billion won with a bid rate of 90.4%. This trend is similar to that of 2018 when the total auction amount was also high at around 11.4 billion won. Recently conducted online auctions have also seen average total auction amounts rise significantly to around 700 to 800 million won, compared to 100 to 200 million won in the past.

Yuanta Securities expects Seoul Auction to conduct about 50 online and offline auctions this year, given the confirmed high auction demand. Considering the current auction market conditions, including the trend of setting record prices for domestic artworks, Seoul Auction's sales are projected to increase by 77% year-on-year to 51 billion won. Benefits from strengthening digital platforms are also anticipated. Seoul Auction, together with its affiliate Seoul Auction Blue, plans to introduce auctions for non-fungible token (NFT) artworks as early as the third quarter.

Researcher An Juwon of Yuanta Securities stated, "The art market is rapidly recovering due to a combination of factors such as increased art consumption, the emergence of art as a financial investment tool, and growing demand for interior decoration," adding, "With a full-scale performance rebound, we expect the stock price trend to reach the mid-20,000 won range seen in 2015."