Mon January 31, 2011

A 'Hoppy' New Year For Hong Kong Stocks?

A Hong Kong-based brokerage has been trying to use traditional Chinese beliefs in its economic forecast as the Year of the Tiger gives way to the Year of the Golden Rabbit on Thursday.

The Year of the Rabbit promises to be a "hoppy new year." That's according to the brokerage CLSA. Its annual forecast based on the traditional Chinese beliefs of feng shui warns of volatility ahead for Hong Kong markets.

"Last year, we were forecasting a tiger leap -– i.e. in the second half, the markets shoot up, which is exactly what played out until November," said CLSA's feng shui economist Philip Chow. "But the rabbit doesn't leap, the rabbit hops, and every time it hops a bit up, it turns around and shoots up its ears and sees if it's safe to go on, and then it hops up again.

"Even on the way up, the stock market's going to be in a zigzag format, even though it's still northward bound."

As for investment advice based on the Chinese elements, CLSA concludes metal is hot, water is bubbling, fire is on fire.

"That would account for financials, and also some of the raw materials sectors, such as metallic mining and steel," Chow said. "The other sector that's water-related would involve traveling: lodging stocks, gaming stocks, and on the transport side, airlines and shipping all fall into that category."

Be warned, however, the forecast is tongue-in-cheek. But feng shui investors should bear one thing in mind: Last year, CLSA's feng shui forecast was correct for nine out of the 12 months. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

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