Liv-ex reported to trade members today on market moves in line with key historical economic events and it made for interesting reading. The Exchange is the definitive source on the fine wine market globally and its data is utilised by professional wealth and fund managers, academics and the fine wine trade.
Liv-ex have measured monthly market moves over the past 15 years and the one that began on June 24th, the day after the UK referendum, is the ninth biggest upward move for the LX50 over the course of a month since measurements began in 2001. Furthermore, add this month’s 6.6% surge and the index has seen a 15.75% rise year to date. Liv-ex Director, Justin Gibbs, comments that the 16.6% decline the LX50 suffered at the peak of the market fall in 2011 is now almost fully recovered.
Historically, there have previously been three strong and extended rallies when the index pushed higher, all linked to significant events. The first followed the proposed UK pension reform (fine wine as a qualifying SIPP asset) and the boom in fine wine investment funds. During this period, the index achieved its record month-on-month move, up 13% in May 2007. Between July 2005 and July 2007, the Fine Wine 50 Index increased for twenty-five consecutive months and registered its second (11.6%) and third (8.7%) highest monthly moves.
The next strong upward momentum followed the Lehman Brothers collapse and global central bank action, including China’s RMB 4 trillion stimulus package. The index registered its fourth record month-on-month increase, when it moved 7.7% higher in April 2010. This rally briefly paused in mid-2010 before commencing a third phase after the ‘greatest ever’ 2009 vintage was released.
And now Brexit has definitely had an effect on a market that was already seeing steady growth. The question, of course, is how sustainable is this upward trend? One thing is for sure, whilst there is uncertainty in financial markets investors will seek safe havens and with the Brexit process potentially taking years the current environment isn’t going to change any time soon.
So with that backdrop what should the canny wine investor be looking at? There are a number of back vintages seeing significant rises in value, we have already reported on examples recently, and there is potential for further growth. Brexit has also distracted the market from one of the best en primeur vintages since 2010, contact us now for more information and the opportunity to acquire an allocation of Chateau Cheval Blanc 2015, rated one of the best wines of the vintage on 0203 384 2262.