Why now?
Congratulations to those readers who spotted yesterday’s typo. There is indeed no Montrose 20120. Yet. And if I were you I wouldn’t hang around waiting for it and no, we are not accepting post-dated cheques. The recommendation was, of course, for Montrose 2010.
A lot of people have also asked for more detail in respect of these green shoots of recovery. Please find below.
Momentum!
Consecutive rises in monthly Liv-ex 100 closes since July;
6 positive weeks on the Liv-ex 50;
Upgrades.
Robert Parker has upgraded several wines of late.
The whole 2005 vintage has flown off the shelves in the last ten days.
Parker is on record as thinking he may have been unduly harsh in respect of the 2005 vintage. In a recent Mouton tasting he upgraded the 2005 from 96 to 99+ points. It ended last November at £3,600 and is now £4,500. Similarly the Mission Haut Brion 2005 has moved from £2,800 to £3,400 over the same period.
China.
Asia is hoovering up stock in a meaningful way, possibly because of the moves in exchange rates making £-based investments cheaper for US$ related currencies: (The Hong Kong $ has been pegged since 1998 and the Chinese Yuan is unofficially pegged).
The USD/GBP chart also makes it beneficial for US buyers to purchase in Europe once again. Interestingly, Diageo used to be the major importer of Fine Wine into the USA. In 2012 they stopped importing, and whilst the market lay dormant there was no perceivable impact. Now that the market has woken up US buyers are now finding it providential to buy direct from UK in GBP.
Merchants’ stock levels.
This also comes at a time when merchants’ stock levels are very low. (Why hold long stock positions when the market is quiet?) When interest picks up, merchants have to go out and replenish stocks. Look, for example, at 2005 Mouton and Mission Haut Brion, both up 20% within the last month.
On all of the exchanges the bid/offer ratio has swung dramatically back to levels consistent with a more buoyant market place. This reflects the return of the merchants into “buy mode”.
The bid:offer spread has shrunk. (Same explanation as above.) The first thing to move is the bid. Once stock levels are replenished the spread will widen once again.
Conclusions.
Anyone considering a first investment shouldn’t hesitate, but don’t buy all at once.
Anyone still sore after a tough 3 years, enjoy the ride.
Anyone uncertain about weightings or exposure, please give us a call.