Liv-Ex Market Report
by Liv-ex.com, July 2008
July saw the exchange continue to break new ground, with a record level of turnover set for the second month in a row. Despite the continued economic malaise, turnover was brisk, with trade up 16% on last month and 75% up on last year. Along with strong demand from traditional merchants in the UK and elsewhere, new investment capital continues to enter the market – presumably seeking calmer waters away from the volatility of equities and the commodity markets. Despite the record trading, the Liv-ex 100 hit the doldrums, recording a modest 0.6% drop to 262.63. The 2005 Bordeaux vintage, newly added to the index, was the main cause of the fall, with 2005 prices softening across the board. The year-on-year increase is now 6.4%, the lowest it has been since July 2005, although the year-to date gain remains healthy at 9.5%. (See www.livex. com for details or find the Liv-ex 100 on Bloomberg: see index code LIVX100). White Bordeaux came to the fore for the first time this year, accounting for 4.5% of trade, with Yquem leading the charge.
(more analysis in the full report)
For the last year the major movers table has been dominated by the 2005 vintage, with ten months of prices surging upwards now followed by two month’s of declines. It is the more famous names of Bordeaux (some of which have more than doubled in price in the last 12 months) where we are seeing the greatest declines, with Petrus, Lafite and Leoville Las Cases all down in July. Regarding the risers, the 2004 vintage continues its good run, while the upward trend on back vintages of Yquem continues to grow. Angelus makes the top movers list for the second month in a row with the strong performance of the 2004 following that of the 1995 and 2000 vintages last month. Indeed,1995 Bordeaux is seeing modest price rises across the board as the better wines approach their drinking windows.
(analysed in detail in full report)
Bordeaux’s liquid gold With Bordeaux’s sweet wines undoubtedly the stars of the 2007 vintage, it is perhaps time to take another look at Sauternes. With investment money focused solely on its red wine brethren – and Asia yet to fully wake up to its delights – it is an easily overlooked part of the Bordeaux wine world. Yet Yquem (Sauternes’ only Premier Cru Supérieur in the 1855 classification), is surely one of the greatest brands of the fine wine world. As we mentioned briefly in last month’s report, investment attention has undoubtedly been turning towards the chateau following the decision by its owner, LVMH, to adopt a more aggressive pricing strategy. What’s more, its full involvement in the annual en primeur jamboree from the 2000 vintage onwards – in contrast to its previous strategy of only selling the wine when it is physically available – has also brought it to the fore. With the 2005, 2006 and 2007 all hitting the UK secondary market at more than £3,200 a case, wines such as the 1988, 1989 and 1990 (which all trade at just under that level) look extremely good value. Even the 100-point 2001, at £3,900, looks strong value when compared to similarly scoring red First Growths. In order to gauge the trends in the Sauternes market we also looked at the other three top sweet white Bordeaux chateaux (in terms of profile, if not price): Climens, Suduiraut and Rieussec. We then limited the data to the six leading vintages from 1988 onwards: 1988, 1989, 1990, 1997, 1999, 2001 and 2003, giving us an index of 28 wines. Since January 2004, it is clear that the big increases that have affected other parts of the fine wine market have not totally passed Sauternes by, with the Liv-ex Sauternes Index increasing from its base level of 100 to 160.33 by the end of July. And although this 60.3% return is significantly below that of the Liv-ex 100 Fine Wine Index at 163.3%, this story has reversed in the last year, with the Sauternes Index gaining 17.3%, and the Liv-ex 100 just 5.9%.
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