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How the Brexit vote is inconveniencing rich art buyers

The United Kingdom votes this week on whether to stay in the European Union, and equity and forex investors are worried about the effect of a so-called Brexit (British Exit) on the markets.

But the Brexit could have could have legitimate implications for a more niche interest group: art collectors.

“In periods of market uncertainty, we tend to see collectors seek out well known blue chip names over younger, more emerging artists, as these are seen to be stronger investments and less risky,” says Jacqueline Towers-Perkins, a specialist in post-war and contemporary art at artnet auctions. “So that could be something to bear in mind with these potential changes happening.”

In other words, the market uncertainty stemming from a possible Brexit could influence high-end art connoisseurs to stick with established folks rather than experiment on up-and-coming artists.

The EU referendum vote on Thursday happens to fall between Sotheby’s (BID) major impressionist and modern art sale, which was Tuesday, and its contemporary sale on June 28. Christie’s major sales will be held on Friday and June 29.

Towers-Perkins hasn’t seen any change in bidder interest on her site, though. “People are still buying and selling in the same way and still looking for the pieces that they’re searching for in the same way that they’ve always had,” she says.

Still, in a note to clients, Consumer Edge Research’s Dave Schick cautioned that “political concerns are global in nature” and the Brexit vote will “likely [have] some impact on consignment wins for major auction houses.”

But it’s not clear whether a Britain’s potential exit from the EU would encourage people to buy or sell art. According to a Bloomberg survey of economists, the British pound will move one way or another depending on how the vote goes. The economists found the currency will either sink to the lowest level in more than 30 years if the “leave” camp wins or potentially climb 6% to its highest level so far this year if the “remain” camp prevails.

And this week in an opinion piece in The Guardian George Soros sounded the alarm that the pound will plummet if Britain leaves the EU.

Schick says the volatility in currency markets would leave “collectors in the UK largely unaffected” but would make an impact on foreign bidders, who would be able to use the pound’s potential weakness in their favor.

Ultimately, though, high-end art collectors may be more influenced by their own tastes than outside market forces.

“There might be some fluctuations in the market but I think ultimately if collectors continue to buy what they love and continue to hold onto the pieces that they’ve loved, I think the market isn’t going to affect people’s collection and buying and selling habits too much,” says Towers-Perkins.

Read more about the Brexit:
What is a 'Brexit'?
Here’s what the Brexit vote could mean for the US stock market
NAFTA architect articulates the global story at the core of the Brexit vote
Harry Potter author JK Rowling uses Voldemort as a metaphor for Brexit

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