No. 224 ~ Coronavirus and the watch market, Part 4

Hello! This is Kaneko from Commit Ginza. This blog contains my personal opinions, I hope you will find it useful reading. In addition, the number of inquiries about watches has increased sharply. We apologize for keeping you waiting and for the inconvenience. If you call us before coming, we will guide you smoothly. In the previous article , we mentioned that the strength of the US dollar has become evident during the recent economic turmoil. Expensive watches are assets denominated in dollars, This can also be interpreted as showing its role as a safe haven asset even in times like today. Today, I would like to examine the changes in the value of real assets since Lehman Brothers. As you know, after the Lehman Shock, stock prices crashed worldwide. And to make up for the financial downturn, Real estate and many other real assets were dumped, causing many real assets to fall in value. This trend began with the collapse of the bubble economy in the early 1990s, the collapse of the IT bubble around 2000, Approximately every 10 years, there was the Lehman Shock in 2008 and the Corona Shock in 2020. Although there is a time lag since the stock market collapse, we have seen a tandem decline in the respective real assets. In fact, the watch market has matured recently with an increase in high-value transactions. It was around 2013-2014, and the trend was from hobby watches to real assets. It seems as though there has been a shift in perception and position. In the wristwatch auction market, with the exception of extremely rare pieces or pieces with historical significance, For many years, it has not reached the 100 million yen mark, In 2013, Aurel Bacs (now Philips) set up From "CHRISTIE'S DAYTONA LESSON 1" It seems that this has sparked a vintage Rolex boom. In the international art market, the key is for an artist to value their work at 100 million yen, the highest price possible, and once the price touches 100 million, the price jumps up instantly. It can also be said that there are many wealthy people who set a minimum investment threshold of $1 million. Since a watch sold for over $1 million at auction in 2013, The highest price has risen exponentially: 200 million, 300 million, 500 million, and 1.7 billion yen. And now, luxury models from Patek Philippe, Audemars Piguet, and Rolex, as well as over 10 million watches, are being sold and circulated in a regular manner. Around 2000, a watch costing around 3 million yen was still the highest price range. Models with dials covered in diamonds, which have become quite common in recent years, It feels like it was a decoration for a show display in a flagship store. However, since the collapse of the bubble economy in 1990, there have been crises every 10 years. The last crisis was the Lehman Shock in 2009. I feel that the current luxury watch market, while still mature, does not have a history of dealing with falling global stock prices. So, I would like to analyze the art market, which has a long history and is well-established. Art, vintage coins, etc. have been charting an upward trend for many years. Amazingly, even when looking at the 10-year, 20-year, 30-year, and 50-year charts, Each of them is on an upward trend. Looking at it on a spot basis, there have been crashes, but they have recovered within a few years and are back on an upward trajectory. For example, in 1987, Yasuda Life Insurance bought Van Gogh's "Sunflowers" at Christie's London. It was acquired for 5.3 billion yen, a new record high at the time. When I bought it, I was mocked as Japan money buying at a high price. Then, in 1990, the bubble burst and there was a lot of backlash and huge losses. The "Himawari" series, which is said to have fallen to less than half its original price due to suspicions of counterfeiting and the collapse of the bubble economy, is now It is said that it may cost 30-40 billion yen. I think art is also a real asset, and it's the kind of extremely expensive collection that people with money end up with. If the bubble bursts and the market falls, prices will naturally fall in tandem. After that, it will gradually return to its original value over the next few years, and then it will continue to rise in value. It also fell with the collapse of the IT bubble, but then bounced back and the price continued to rise. The same was true during the Lehman Shock. From the perspective of an art dealer and a watch dealer, The consensus is that "good things don't go down." By "good" I don't mean a model that costs tens of millions of yen. The condition of each individual, the accessories, even the same Rolex, It depends on the type. We will tell you more about it when you come to our store! I would expect the watch to plot the same chart. It will drop for a while, but I predict that it will bounce back starting with the best ones. Economic shocks cause prices to fall, but there are people who buy at the lower price. It's all about supply and demand. And when the low-priced individual balls run out, This is a trend that will change to an upward trend. The current model is being manufactured every day and the number of units is increasing, It is impossible to grasp the total number, and there is a risk that the value may fluctuate in the future due to a sudden increase in production. On the other hand, discontinued watches are limited to only ***** pieces remaining in the world. Even manufacturers cannot turn back time and increase production. There are many people who want to buy such watches, Even in times of economic downturn, they can be collected not only as an investment but also as a hobby. Each watch has its own story and manufacturing secrets. There is a lot of value in a watch that cannot be summed up in a single word. and, I think it's a great product that combines the joy of wearing it with the asset value of a dollar deposit . We are happy to explain at any time. I'm looking forward to seeing you again here!! Commit Ginza Executive Advisor Commit Ginza Executive Advisor Tsuyoshi Kaneko