Broker says fine wine investment could be a haven of stability in FTSE bear market
Vin-X Wine Investment, a specialist fine wine investment broker, said in an article last week that fine wine could offer investors a safe haven in the highly volatile financial environment of the past few months.
In a piece entitled “The Shortest Bear”, Vin-x noted that the traditional investment classes, namely currencies, stocks and bonds, have had a hard time finding direction in recent months.
“Global markets are lurching from one extreme to another, risk off one day, risk on the next, able to be both buoyed by expectation of government intervention and petrified of the same,” the broker said, noting that the FTSE 100 had entered a Bear market on Wednesday. Vin-x added that geopolitical conflicts, the commodities downturn, the upcoming US presidential election and EU referendum in the UK have all contributed to an uneasy investment climate.
“Against this background, wine has remained for the most part calm and stable. In fact the period since mid-November has seen a three percent rise in the value of the liv-ex 50,” Vin-x pointed out, adding that “one can reasonably expect further increases in the Liv-ex 50”, the fine wine index.
“In a financial climate like this where the only certainty is uncertainty it’s instructive to look at the few markets that are showing stability and positivity.”
The broker also argued that wine fundamentals are “in their own right of huge interest to serious investors”, drawing comparisons to other collectible assets like classic cars or art.
“Wine is an improving asset in diminishing supply, production levels are hugely restricted by both geography and law and demand is large, international and increasing,” Vin-x concluded.
Meanwhile, the Liv-ex Fine Wine 50 added 0.1 percent last week, buoying the year-to-date tally to 1.8 percent. Bordeaux edged slightly higher, closing the week with a trade share of 78.6 percent. Burgundy dropped from 9.0 percent to 5.5 percent, while Italy was little changed at 8.9 percent of trade.
Montrose 2009, at £1,830 per case, was the most traded wine by value, with strong performances by Ornellaia 2010, Pin 2000 and Cos d’Estournel 2009.