Thursday 22 January 2009

CLSA fung shui index points to more trouble in Year of the Ox


Investors looking forward to a fresh start have been counting the days until the Year of the Ox kicks off, but the zodiac signs point to more trouble ahead, according to CLSA’s fung shui index released yesterday.

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Guanyu said...

CLSA fung shui index points to more trouble in Year of the Ox

Nick Westra
22 January 2009

Investors looking forward to a fresh start have been counting the days until the Year of the Ox kicks off, but the zodiac signs point to more trouble ahead, according to CLSA’s fung shui index released yesterday.

The stock market’s Hang Seng Index might chart a path through the first three quarters of this year that resembled the figure of a cow rather than the ox or bull, CLSA said.

Through the first half of the year, the benchmark would rise and fall, forming a “pair of horns”, before bottoming out into an “udder” around the third quarter. It would then finish the year higher than when it started after a moderate recovery.

“That’s why we named it the Year of the Cow instead of the Year of the Bull,” said Vonnie Chan, a senior institutional sales manager at CLSA.

“Cows [are] gentle, weak and soft and we think the Hang Seng Index is going to behave like a cow.”

The Year of the Ox will match up with the earth element for the first time since 1949. Metal-related industries such as mining would benefit because earth generated metal, said Ms. Chan. And since earth absorbs water, the New Year could make waves for industries such as logistics, beverages and marine transport.

The Hang Seng Index could dip below last October’s lows during the summer months, before rebounding later this year, she added.

The benchmark’s rally might trail that of the H-share index, however, because of a lucky arrangement of zodiac signs for the mainland government’s leaders.

“Hu Jintao and Wen Jiabao were born in the Year of the Horse, so they have a lucky star to provide them with money and support [for] China,” Ms. Chan said.

CLSA originally launched its tongue-in-cheek fung shui index in 1992 as a Lunar New Year greeting card for clients. The guide became an annual fixture and after briefly being discontinued in 2005, it was released again yesterday. Two fung shui masters collaborated with CLSA on the latest instalment.

“Fung shui is a very helpful indicator from a Chinese perspective,” said Ms. Chan. “And investors are really, really desperate and they [need] something that gives them hope.”

In a note to clients last year, Ms. Chan used fung shui principles to correctly predict a drop in property prices and the onset of a string of hazardous natural disasters.

Francis Lun Sheung-nim, a general manager at Fulbright Securities, said: “I am not a superstitious person and I don’t believe all this. Another approach is not buying any stocks, just buying gold and real things that you can carry and you can count.”