Does the feng shui factor have any bearing on stock market performance?

If the investment bank CLSA’s Feng Shui Index is any guide, now is not the time for investors to divest – no, the Hong Kong stock market, it forecasts, will rebound later in the year.

In the bank’s latest installment – the 24th – of its now-famous tongue-in-cheek look at the year ahead, it gives its predictions for the Year of the Dog.

According to CLSA: “The Dog represents duty and loyalty and is a sign of defense and protection. It’s a good time to be level-headed and to err on the side of caution. Entrepreneurs should stick with their most loyal clients, and investors are advised not to bite off more than they can chew.”

CLSA_Feng Shui Index 2018
CLSA Feng Shui Index 2018. Photo: CLSA

This year, an enthusiastic Earth Dog jumps out of its kennel, tossing the Fire Rooster back into the barn and sending the HSI skyward. However, after a great start, the hound is seen taking a tumble in March, causing the index to head south.

Through until summer, the market chases its tail and drops, before the Dog and our favorite Earth Rooster, the HSI, extend a little more consideration toward each other and get back on track.

CLSA advises investors to back pharma and consumer sectors, as the Earth Dog sees strong gains in ‘wood-related’ industries overall. The telecoms, internet, tech and utilities sectors will perform well but casinos and transport won’t get a leg up until October.

In a contrarian call, investors are advised against looking for decent returns from banks and financials – anyone who does is barking up the wrong tree this year.

Meanwhile, copper and gold can counter disruption caused to those in northern reaches by wu wang (“five yellow”) and san sha (“three killings”).

CLSA analysts evaluated the Bazi (eight-character fortune) against the birth sign of the Hang Seng, which, having launched in 1969, is an Earth Rooster.

They also incorporated the mysterious influences of the wu xing (“five energies”) and xuan hong (“flying stars”) and focused on the relative strengths of each of the elements – Earth, Water, Metal, Wood and Fire – in their sector analysis.

Few guessed the Hang Seng right in the Year of the Rooster, CLSA included. The CITIC securities subsidiary failed to anticipate a strong market, which surged 11 out of 12 months and finished 2017 as the world’s best equity market.