Wine prices rise in a slowing economy
MD – Sure Holdings Ltd
Certainly the stock markets are continuing to monkey around for the Chinese New Year and there does not look like any positive news on the horizon for the global economy. Things are just slow, plain and simple. The economy needs time to get back on its feet, it very much feels like there is a global recession on us already. If we are, then this means a long term bearish outlook on the economy and stock markets.
As investors bail out of the stock market and into cash, the fine wine market continues to attract attention. In January, the London Vintners exchange confirmed the Fine wine Index top 50 wines had increased 1.7% in January and this week further confirmation that the market has increased again for the first week of February. Bordeaux continues to increase in its market share from week to week, now around 84%.
Yet fine wine prices are still massively undervalued, many first growth vintages are off their highs of 2008 and 2011 down more than 50%. There is an attractive opportunity in front of us.
If you want to check the downside, of course the wine market could fall further, nevertheless it is highly unlikely because of the current momentum that is seen building. This time, the momentum has a purpose, safe havens are needed in a turbulent stock market. On the upside, we buy on a market that had a four year decline and a 12 month stable to low return. To me this sounds like a market coming out of a bottom curve. Does it sound like that to you?
Take a look at the charts provided courtesy of Liv-ex below and see if you agree.