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Sunday, June 16, 2024

Investing in the year of the Snake

by Joanna Andrews

February 10, 2013 ushered in the Year of the Snake © Shutterstock

February 10th marked the start of the New Year in the Chinese lunar calendar. Each year is represented by one of 12 creatures in the Chinese zodiac. 2013 waved off the year of the dragon and welcomed in the black water snake. But what does it all mean for the year ahead? Joanna Andrews takes a look at predictions from one of Asia’s leading brokerages…

Unity, travel, movement and friendship are said to be the themes for the year of the snake, according to ancient belief. Chinese New Year is a time to welcome longevity, wealth and prosperity and eliminate past negativity. The snake is said to be a wise and enigmatic creature, and analysts predict good things for the year ahead, saying it could bring “lots of great new opportunities.” 

Hong Kong-based brokerage, CLSA, recently published its 19th annual Feng Shui Index, a tongue-in-cheek look at what the celestial signs suggest is in store for the year of the black water snake (which occurs once in 60 years). The index is based on the principles of feng shui, a Chinese practice that is believed to be a pseudo science.

 “The snake is a skin shedder. That signifies radical changes,’’ says Mariana Kou, CLSA’s self-proclaimed feng shui master.

The report features predictions for the financial markets, property and celebrities. The annual astrological prediction is one of CLSA’s most eagerly anticipated reports and it is unveiled to clients from across Asia, Europe and the United States. But while the investment house stresses that it is “a lighthearted look at the equity markets”, it has a team of about six people plus feng shui masters working on the report for several months leading up to the publication – and clients take it very seriously. If you are in any doubt about its’ credibility, you just need to look back at CLSA’s previous predictions.          

The snake hasn’t been a lucky icon in the past. Previous snake years included 1929 (Great Depression), 1941 (Pearl Harbour attack), 1989 (Tiananmen Square massacre), 2001 (bursting of the dot com bubble and 9/11 attacks). While it hasn’t had a good track record in the past, CLSA predicts that this year the beast could behave better as it "uncoils". 

Kou says that this time around it will be different because all five elements – fire, water, earth, metal and wood – are present, In 2013 there is “good balance on the five fundamental elements… which should rein in any significant upheaval,” . 

In the past three snake years, Hong Kong’s Hang Seng lost six per cent, 12 per cent and 34 per cent, respectively. However, CLSA predicts a good first half for the HSI – on the back of a resource led rally between May and July, but it warns of massive volatility in the second half. The index is expected to end the year with a decent rise, taking it back above its starting point.

The best performing sectors are forecast to be those associated with metal: banking, broking, financial stocks, along with those associated with water, like logistics.

"We see a resource led slow burn run-up for the HSI from the second quarter. As it builds, risk flicks 'on', resulting in the second half being more volatile, but there are opportunities," Kou adds.

Garment, fashion, retail and other companies associated with wood will be relatively stable while earth-related sectors like agriculture, construction, property, building materials and resources will be disappointing.

And just when you thought gold couldn’t glitter much more, “Gold dazzles its way through $2,500 per ounce, silver polishes off $50 per ounce and uranium goes code-red hot."

The most auspicious dates for the next 12 months are February 28th, May 14th, June 26th, August 13th , October 16th and January 7th, though the report did not say what exactly to do on those dates investment-wise.

According to CLSA, US municipal and corporate bonds will be "the next bubble to burst". The report also predicts “a tough year” for US Federal Reserve Chairman Ben Bernanke “with much of the trouble coming from the East.”

Whether you believe it or not, international investors are clinging on to any investment advice, no matter how unconventional, given the overwhelming volatility in much of the worlds markets.

Gong Xi Fa Cai, or Happy New Year!

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