Million-dollar bids may be lacking at Australia's premier horse sale next week, the biggest south of the equator, as the usual big spenders from Hong Kong, Singapore and Malaysia turn up with lighter wallets.
The tycoons, who have accounted for a third of the money that changes hands at the annual San Miguel/William Inglis Easter sale, face slumping businesses at home. That means less money to spend on new racehorses.
"People will be buying a lot more wisely because they're trying to meet rising living costs in Hong Kong, let alone support their hobbies," said David Moore, the city's seventh-ranked trainer. He expects Hong Kong racing enthusiasts to spend between 10 percent and 20 percent less than usual.
Last year, 404 yearlings sold for a record A$67.5 million (US$35.7 million), including two for more than A$1 million, and six yearlings have fetched A$1 million or more in the past three sales. This year's take is likely to be less after prices sank as much as 15 percent at sales since January, underlining a slowdown in global economies.
Asian buyers have less to spend after Singapore's economy shrank 2 percent last year, the worst recession since 1964. Hong Kong's growth slowed to almost zero and Malaysia posted a gain of just 0.4 percent.
"It's like luxury cars, yachts or waterfront homes," said Tony Pearson, global head of markets at National Australia Bank Ltd in Sydney. "The fortunes of the whole racing industry run concurrently with the general health of the economy."
Still, Inglis, which sells two-thirds of Australia's racehorses at auction, said increased interest from Europe may make up for dwindling Asian demand.
"We've had several inquiries from new buyers coming down from Europe and also from the Middle East, particularly the United Arab Emirates," said Jonathan D'Arcy, an associate director at auctioneer William Inglis & Son Ltd.
Buyers from the US and Europe are attracted to Australian sales by lower prices.
In part that's because it's cheaper to impregnate mares with the world's best stallions in the US and European off-season, when there's less competition from owners, said John Messara, chairman of breeders lobby group AustHorse.
"You can come to Australia and buy a yearling for a fraction of what the same yearling would fetch in a Northern Hemisphere country," said Messara, who is also managing director of Scone-based Arrowfield stud in New South Wales, which is offering 45 yearlings at the sale.
Unbridled's Song, winner of A$1.3 million in race money, serviced mares in Australia for A$25,000, while in the US it costs A$200,000, he said.
About 60 international stud horses, or shuttle stallions -- worth as much as US$100 million each -- move through Australia annually as part of a global circuit that sees them service mares in Europe, North America and Asia.
Buyers in town for the sale include Ireland's Demi O'Byrne, UK agent Adrian Nicholl and John Ferguson, who buys on behalf of the Crown Prince of Dubai Sheikh Mohammed Bin Rashid Al-Maktoum's Darley stud.
Next week's 508-horse auction includes 50 one-year-olds by Danehill -- the US sire of seven of the 10 top-selling lots at last year's sale, whose race-winning progeny have bagged more than A$126 million in prize money.
"Danehill will be the star," said Gerry Harvey, the billionaire founder and chairman of Harvey Norman Holdings Ltd, Australia's largest furniture and electronic goods retailer, who is looking to sell four horses from his Baramul stud, at Widden Valley in New South Wales.
"While I expect the market to be subdued, the quality of the catalogue is so good, you might get some surprises as to who comes out of the woodwork to secure some of the wonderful pedigrees that are on offer," Arrowfield's Messara said.
The San Miguel/William Inglis Easter sale runs Tuesday through Thursday.
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