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Published 12 December 2012 15:23, Updated 04 January 2013 14:53
Classic Bond: Aston Martin DB5s, as seen on Skyfall, are appreciating in value
They say beauty is only skin deep and the owners of stallion Fastnet Rock have been rewarded handsomely for their principled approach to horse trading. Fastnet had what was described as a “big, common head” and was passed in at $290,000 as a yearling in 2003 after owner Coolmore Australia refused to lower his price tag.
But he started winning some of the nation’s most prestigious races, including two Group 1 wins, vastly increasing his stud value. This is the value he can bring to a horse stud by servicing mares.
In the 2011-12 season, his offspring earned more money on the track than those of any other stallion, giving him the title of Australia’s champion sire.
During 2011 he “covered” 224 mares, at a fee of $132,000 earning a cool $29.6 million. During 2012, his owners raised the fee to $220,000, although they gave him a bit less work. “He probably covered less than in 2011, maybe 170 or 180,” Inglis bloodstock consultant James Price says. That means he earned about $39.6 million.
In other horse news, those who “took a leg” in the syndicate that owns gelding Sincero have also done well. Sold as a yearling for $8000, he earned $1.7 million in winnings on the track in 2012. It’s a shame they won’t be able to cash in on his jewels like the owners of Fastnet Rock.
Chinese cooks have always done the most amazing things with pork. And in recent years as China has become wealthier, more Chinese people have had the money to regularly enjoy delights such as pork and chive dumplings, red roast pork and suckling pig.
This has put upward pressure on soybean meal, which is used to feed pigs and to a lesser extent chickens but in the past year a confluence of factors sent its price through the roof. If you had taken a punt on soybean futures at the Chicago Board of Trade, you would be laughing.
The rising global demand for protein has whittled down global inventories of soybean meal for years, leaving little buffer stock at the start of each year. Then South America suffered a drought last Christmas and the United States and Russia suffered similar conditions during summer this year, causing a huge global shortage of feed grain for animals.
Rabobank commodity analyst Nicholas Higgins says soybean meal peaked in August at a price 74 per cent higher than the start of the year. “It’s led by Chinese demand,” Higgins says.
It has since come back but is still up about 44 per cent. But for most of us it was bad news. “We’re all in a sense paying more in the higher feed grain prices by paying more for what we’re eating,” Higgins says. “It hasn’t been good news for anyone this year.”
A supply response in the coming year should ease soy prices, he says. His picks for 2013 are palm oil and coffee, for which there is always steady demand.
The past year was a bit of a flop for Australian art, with turnover falling about 5 per cent from that in 2011 to about $95 million, auctioneers Deutscher and Hackett say. But strong top-end collector demand and competition for the best works, in particular schools, crystallised into some sensational results.
Artworks from the 19th century Heidelberg “golden period” were in strong demand, with Arthur Streeton’s Settler’s Camp selling for $2.52 million in May. Former owner Robert Holmes a Court paid a record $800,000 for it in 1988.
The British Grosvenor School artists and their modernist prints from the late 1920s and 1930s have also become an international phenomenon. Prints from Ethel Spowers, a Melbourne artist during this period, commonly sold for $2000 in the 1970s but international collectors are now on the hunt. Her linocut The Gust of Wind fetched $174,000 in April in London. Others of hers have risen almost 400 per cent in four years.
The right contemporary artists have also outperformed, in particular the works of Ben Quilty and Philip Wolfhagen.
“Buyers lucky enough to source their works in the primary market could expect a healthy 50 per cent-plus return over the past 12 months,”
Deutscher and Hackett’s Chris Deutscher says. “There are queues of collectors waiting for these artists’ works when exhibited by their galleries.”
The year also saw a new global record for a work of art. The Gulf kingdom of Qatar paid £160 million ($246 million) for The Card Players by Cezanne – a vast amount of money for a painting that ironically depicts French peasants playing cards.
It’s hard to think of a more emotional investment than a classic car. But with near-zero interest rates in Europe and the United States, maybe, just maybe, there’s sense in buying one. So long as you don’t smash it.
“In the States and Europe, if you have millions of dollars in the bank, it’s worth less tomorrow than it is today,” classic car expert and the former head of Sotheby’s Australia collectors motorcars, James Nicholls, says. “So people seem to be saying, ‘I might as well buy something I’m going to enjoy and invest in it’.”
Interest rates are a little better in Australia but Nicholls says there is always good demand for cars that display “provenance, history, originality, condition, rarity and desirability”.
This is evidenced by the Historic Automobile Group’s HAGI index, which shows classic cars such as Ferraris and Porsches broadly rose in value by 18.31 per cent in the year to October, far outperforming most equity markets.
Mining magnate Clive Palmer paid $450,000 at auction this year for a 1937 Bugatti Type 57 with Ventoux coachwork. It’s a slower, steadier beast than the modern 400+km/h variety of Bugatti and takes strong leg muscles to operate the brakes. But Palmer, with his Titanic II plans, is a noted fan of old-world machines.
Nicholls says Ferraris from the ’50s, ’60s and ’70s are particularly popular, and original condition is often more valuable than restored.
James Bond also did wonders for Aston Martin owners when be brought his old DB5 out of the garage in the movie Skyfall only to have it destroyed.
“If you had bought an Aston at the start of the year you would be very pleased with yourself,” Nicholls says.
The year has not been an exciting one for property investors but a few key areas outperformed. The resources boom and a shortage of houses drove Darwin prices to new highs, in particular the suburb of Lyons where median prices rose 18.75 per cent, Residex reports.
There you can pick up a “modern elevated stunner” at 15 Danimila Terrace for $865,000, complete with five bedrooms, a saltwater pool and sturdy corrugated iron walls.
“Prospects for Darwin have become more solid in recent years because of the resources boom,” BIS Shrapnel associate director Kim Hawtrey says.
There was also strong demand for some Perth suburbs but not those by the ocean. Places near the airport, such as Dayton (growth of 22.83 per cent) and Carmel (growth of 13.76 per cent), experienced double-digit increases, probably because of their popularity with cashed-up, fly-in, fly-out miners.
Strong demand for hotel rooms in resources towns would have also brought huge asset value gains to their owners, Hawtrey says, but he does not expect a resources slowdown in these markets. “That’s the construction phase of the resources boom but then we go into the extraction phase, which goes on for the next 20 years.”
The strong Australian dollar has been a heavy blow for manufacturers and exporters. But importers were the beneficiaries, in particular The Reject Shop which resonated with the mood of thrifty, nervous consumers who are watching their budgets. The Reject Shop’s share price rose from about $10.50 at the start of the year to past $15 – a capital growth close to 50 per cent.
The strong dollar also resulted in large numbers of Australians jetting off overseas. The share price of travel booking company Webjet rose from 50¢ in January to about $3.75.
“We’ve seen good stock growth in those Australian dollar-boosted companies over the past year,” BIS Shrapnel’s Hawtrey says.