The Liv-ex Fine Wine 50 Index has continued its strong upward momentum this month, taking it to its highest level since October 2013. It closed Friday at 306.59, up 6.8% month-on-month. The index has directly benefitted from weaker Sterling in the wake of the Brexit vote four weeks ago.
Yet historically, this is not the strongest monthly move on record for the Fine Wine 50 Index. As can be seen from the graph above there have previously been three strong and extended rallies when the index pushed higher. The first followed proposed UK pension reform (fine wine as a qualifying SIPP asset) and the boom in fine wine investment funds. During this period, the index achieved its record month-on-month move, up 13% in May 2007. Between July 2005 and July 2007, the Fine Wine 50 Index increased for twenty-five consecutive months and registered its second (11.6%) and third (8.7%) highest monthly moves.
There were also two other notable periods when the index experienced strong upward momentum. The second followed the Lehman Brothers collapse and global central bank action, including China’s RMB 4 trillion stimulus package. This saw the index register its fourth record month-on-month increase when it moved 7.7% higher in April 2010. This rally briefly paused in mid-2010 before commencing a third phase after the ‘greatest ever’ 2009 vintage was released.
The recent 6.8% rise is the ninth largest monthly move for the index. The question is: can this rally be sustained and extended? With summer now upon us we may need to wait for the Autumn to find out.