The level of the Liv-ex 100 has increased 25.5% in the last decade in its denominated currency, sterling. Yet over the same period the level has fallen 4% in euros and tumbled 19% in dollars.
Following the Brexit vote in June 2016, the Liv-ex 100 rose as foreign buyers took advantage of the sterling weakening to buy fine wine, which in turn caused prices to rise. However, in the second half of 2016 the Liv-ex 100 rose 18.3%, but only 6% in euros and 2.6% in dollars.
The year so far
Recent data from the Liv-ex Fine Wine 50 suggests that the relationship between the fluctuation of the pound and fine wine prices since Brexit might have changed. It’s easier to track this relationship over a shorter time period through the Fine Wine 50 index as it is recorded every day, compared to the Liv-ex 100, which is recorded once a month.
The chart below shows the Liv-ex Fine Wine 50, GBP:EUR and GBP:USD all rebased to 100 in January 2016. Up until the start of May, the pattern is clear: as sterling falls, the Fine Wine 50 rises; as sterling rises the Fine Wine 50 drifts.
However, since mid-May the picture has become confused. Sterling has fallen 4% against the euro and risen 2% against the dollar, while the Fine Wine 50 has flat lined. Is this a sign that euro buyers are exhausted after a twelve month buying spree? Or just the net effect of sterling strengthening against the dollar, putting off currency sensitive Asian buyers?
*An edited version of this post was sent in an update to Liv-ex members this morning.