New indices help understand the art market

What do a cut by Lucio Fontana, an apartment in Manhattan, and a Google share have in common? At first glance, very little, unless the behavior of the person buying the painting is driven by an investment logic. From this perspective, art can be seen as an asset class that generates returns and risks measurable through typical financial parameters. Of course, those who buy art are acquiring a special type of good: it has a price subject to fluctuations over time, capable of producing gains or losses like a stock or a bond, but it can also offer aesthetic pleasure, social and cultural value as well as monetary value, while being exposed to specific risks, from theft of the beloved object to forgery.

While specific risks can be hedged with insurance products (against theft) or with expert opinions (to verify provenance and attribution), the toolkit of an art investor must also be enriched with information and analytical tools inspired by the world of finance.

The recent launch of the MM Art Indices, developed by one of the leading experts in art and finance, Jianping Mei of the Cheung Kong Graduate School of Business (CKGSB), in collaboration with SDA Bocconi School of Management, marks an important step toward analyzing and understanding the art market. The main innovation lies in the introduction of continental indices (Europe, Americas, Asia-Africa-Oceania), which allow international markets to be tracked over the long term (25 years) using public, reliable data (auction prices from leading houses) processed with rigorous, well-established methodologies. Another innovation is the creation, alongside market indices, of liquidity indicators and sentiment metrics at the artist level. Together, these measures expand the depth of analysis and increase comparability between markets and artists.

The findings are enlightening: on the one hand, Europe shows stable but unspectacular performance over the past 25 years; on the other, emerging regions such as Asia have experienced rapid growth followed by sharp corrections, reflecting both the opportunities and risks typical of fast-developing markets. Comparison with the stock market also reveals key aspects: over the past fifteen years, art has offered modest or negative returns, while financial markets have enjoyed a prolonged expansion phase.

The trend in art prices reflects global economic, political, and cultural transformations: from the rise of Asian economies, which has fueled regional collecting, to economic and health crises that have affected liquidity and market confidence. Interpreting these dynamics, therefore, requires an interdisciplinary approach that combines expertise in economics, history, and management. To gain a full understanding of the system’s complexity, it is in fact necessary to integrate indices (which capture only transactions at auction houses, not galleries or dealers) with complementary qualitative approaches to better understand a market that, to this day, remains opaque.

The launch of the indices coincided with the establishment of the Art Market and Finance Monitor at SDA Bocconi, envisioned as a permanent research and analysis lab. Its goal is twofold: on the one hand, to provide art market operators with useful tools to make informed choices; on the other, to contribute to the transparency and sustainability of a complex market where passion inevitably intersects with economic and financial logic.

The MM Art Indices are only the starting point of a more ambitious project, in which academic research and methodological rigor can offer the art market concrete contributions, overcoming informational fragmentation and providing a solid basis to interpret the present and plan for the future. This way, it will be possible to build a bridge between scientific knowledge and the real needs of market participants, fostering a culture of the art market rooted in competence and awareness.

Originally published in Fortune Italia