When Louis Mangin began to spend time in China, he encouraged his philatelist father in France to start collecting Chinese stamps. Mangin himself also began a collection - and so involved did he become in stamps that three years ago he quit his job as a lawyer to open a Hong Kong-based auction house specializing in stamps.

Zurich Asia's latest sale takes place this weekend at the Excelsior Hotel and includes an exceedingly rare Red Revenue stamp, with an estimate of HK$2.5-3 million. "We held our first auction in 2008," says Mangin. "It was a one-day sale with about 50 bidders. Now, we organize three-day sales attended by about 150 bidders."

Interest in stamps as an investment is growing in this part of the world, but it is not a pool into which you should jump unless you are intrinsically interested in philately and know your Red Revenues from your Penny Blacks. Nick Slater, Managing Director of Philatelic Investor, a UK-based website, says: "Philatelic investment is not for beginners and specialist advice should be sought."

Dr Jeffrey Schneider, Director of Interasia Auctions Limited, a philatelist specialist whose recent Hong Kong auction realized a record $7.9 million, offers some key criteria for beginners: "That the stamps be from countries and issues that have a good collector following, that the particular stamps are recognized issues or, in the case of a variety stamp - as many of the most valuable stamps are printing errors - it is a recognized variety, and that the particular stamps are of a certain significant recognized value level."

The key, says Slater, is to find stamps that are likely to have strong future demand and which are in limited supply. Mangin warns that you must take a long-term view and advises that you build up a cohesive collection over a period of time of at least 10 years.

Two categories are particularly appropriate for Chinese collectors: classic stamps from the Qing dynasty, and PRC stamps. "Within the Qing Dynasty, for example, the Red Revenues - an issue of stamps overprinted in 1897 on a proposed Revenue stamp because those in the recently adopted new currency had not yet arrived from the printers - are extremely popular," says Dr Schneider.

Mangin points out, however, that increased demand for PRC stamps has pushed prices up. "For example, a 1968 unissued 'The Whole Country is Red' stamp would have gone for around HK$30-40 10 years ago, but today the price is around HK$400,000."

Slater notes that in the past 30 years average price gains of around 9 percent to 12 percent a year have been realized for investment-grade stamps. "Hidden within those numbers are certain stamps that have done spectacularly well and others that have gained very little, but a well chosen portfolio can expect to achieve gains within these percentage bands."

The biggest pitfall in philately is finding out that the precious stamp you just bought is a fake. "If you are buying then you need to work with a trusted advisor or dealer," says Slater. "Fakes and forgeries of investment-grade stamps are very common: it is therefore vital that authenticity can be proven or guaranteed prior to purchase. With selling, it is important to ensure that a valuable collection is assessed by dealers or auctioneers with the necessary knowledge of the stamps you wish to sell in order to maximize the selling price and get the best return."

While it is perfectly acceptable - indeed, desirable - for an "Old Master" painting to be restored, this does not translate to stamps. "Repairs and restoration are factors that reduce the value," says Dr Schneider.

The humidity of Asia does postage stamps no favors - so keep your collection in a controlled environment, such as a 24-hour air-conditioned bank safety deposit box. Mangin, interestingly, says he prefers to keep his own collection back in Switzerland.

Marketwise

(HK Edition 09/11/2010 page2)