HONG KONG — Hong Kong investors preparing to welcome the year of the dragon should look forward to a strong stock market rally much like the mythological creature rising from the depths, a brokerage said Wednesday in lighthearted astrological predictions.
CLSA Asia-Pacific Markets released its highly anticipated annual feng shui index on Wednesday ahead of the Lunar New Year next week that marks the start of the year of the dragon.
The firm said its index predicts that Hong Kong's benchmark Hang Seng Index will have a lackluster performance in the first half of the year, with the "dragon lingering below the water," said Philip Chow, a CLSA "sorcerer" who helped write the report and is an equities analyst in his day job.
Feng shui is the Chinese practice of arranging objects and choosing dates to improve luck. While the predictions are lighthearted, many people in this southern Chinese financial center carefully follow feng shui principles in the belief they will seriously boost their wealth.
The dragon is the only creature in the twelve-animal Chinese zodiac that doesn't exist in real life and according to Chinese tradition, they only appear right before important events such as a transition of power, Chow said.
For investors, that means "when the dragon does actually show up is when overall desperation in the markets is at an extreme," said Chow. In August, "we would see the dragon accumulate enough energy to soar from the depths."
Invoking a Chinese proverb that says you can never see a dragon's head and tail at the same time, Chow said 2012 will have "very fat moneymaking opportunities (but) the time frame is very short, so we expect most of the gains to be over by December."
The brokerage predicted in 2011 — the year of the rabbit — that markets would proceed cautiously in a zigzag fashion. Chow said that forecast came true.
"When frightened the rabbit overreacts and goes back into its hole," Chow said. "Unfortunately we were right on that part. It got scared by the eurozone crisis."
The term feng shui literally means wind and water and many businesses in Hong Kong adhere to its principles, which date back thousands of years. Typical practices include placing two stone lions at a building's main entrance to defend the wealth within the building. Lobby or courtyard fountains are popular because they are believed to bring the energy of water, which is an ancient symbol of abundance.
Numbers also play an important role, with auspicious dates chosen for company meetings and announcements. They even play a role in company stock codes, with many Hong Kong companies incorporating the number eight, which in Chinese rhymes with the word for prosperity.
Along with predictions on the local stock and property markets, the report also offers predictions for politicians and celebrities.
For instance, German Chancellor Angela Merkel, who was born in the year of the horse, will have a "shocker of a year" as she helps battle the European debt crisis, the report said.
Now in its 18th year, CLSA's index has become a fixture on Hong Kong's investment calendar. The authors consulted 10 feng shui experts for the report and attracted about 220 people to an investor luncheon to release the report.
But Chow said the predictions shouldn't be taken too seriously.
"This is just sort of tongue-in-cheek," he said. "For fun."
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