Alternatives: Thousands of cases of wine come home

 A bunker mentality might be bad for the financial markets, but it has been great news for Hong Kong's growing reputation as a global wine hub.

Crown Wine Cellars, which stores valuable wines for more than 1,000 clients in a former British army munitions depot at Shouson Hill, says the city's collections are coming back home.

"There's a flight to safety and what we are seeing is a massive increase in the number of collections coming back," says Gregory De'eb, the general manager.

"The days when people believed it was important to keep their collections in London have been blown out the window. What people are saying is that they want their assets close to them. If I want money, where can I liberate these assets?"

In recent years, wine as an asset class has increasingly cemented its position in Hong Kong, especially among the pool of mainland collectors who want their wines close and accessible.The territory's removal of a 40 per cent duty on wine in February made conditions favourable for wine investors, says Mr De'eb, but no  one was prepared for the number of bottles coming back. "You have to remember that Hongkongers own millions of cases ?perhaps between 15 and 20 per cent of the world's fine wine stocks."

Before February, collectors and investors were sending back 2,400 bottles a month. With the scrapping of duties, the numbers grew to 8,400 a month. Now with the financial crisis beginning to bite, the number has swollen to 20,160 a month, he says.

The advantages of wine are well known. There has been growth of 12 to 15 per cent a year in certain countries. As a so-called "wasting asset", it has tax advantages, and there is always the consolation of drinking the asset if the price falls.

In May, Acker Merrall & Condit, a wine auction company based in New York, sold HK$64m ($8.2m) worth of wine in its first Asian auction at the Island Shangri-La Hotel ?an event that was expected to last six hours and raise $6m.

Spirited bidding for the 922 lots went on until well into the evening, with the top lot, 12 bottles of 1990 Domaine de la Roman閑-Conti, fetching HK$1.89m, the high end of an estimated range and an auction record for a case of Roman閑-Conti.

Other collectables, such as art, have been promoted as the savvy investor's alternative to stock picking and market timing. Nick Simunovic, director of the Gagosian Gallery in Hong Kong, says art is still holding its own in Asia, despite the financial crisis.

"There is of course some trepidation in the market and prices are rolling back to 2006 levels," says Mr Simunovic. "But seasoned and new collectors can realise substantial value at these prices."

While Sotheby's Asia Week sales in Hong Kong in early October (and in New York in September) ended in unsatisfactory results, the company warned that longer term trends could be harder to predict because the sale was held at a time of "acute stress and uncertainty".

The global events surrounding the end of the credit bubble created a volatile environment, Sotheby's said in a report, adding that it would be "naive to think buying decisions on Asian art and works of art were not made in the context of this economic uncertainty"."Clearly, Hong Kong buyers had a reason to be cautious," the report said.

Nevertheless, Asia Week in New York had a combined sale value of $77m across nearly a dozen separate sales at Sotheby's and Christie's, with nearly 60 per cent of the lots at both houses sold.

Even in an uncertain market, there will always be top prices for hotly contested lots ?an early 18th century Qing dynasty armchair sold for $332,500, well above its estimate of $180,000.

According to Sotheby's, the Asia Week sales showed the market pulling in two directions ?high premiums were paid for quality works with a connection to the imperial throne and also for works by contemporary less-established artists which, in future, could show strong returns.