One might expect the Year of the Dragon, which kicks off next week, to be a lucky time for investments. But that’s not necessarily the case, according to this year’s edition of the Feng Shui Index released by Hong Kong-based brokerage firm CLSA.
The index, which applies traditional Chinese astrology to market forecasting, predicts a volatile year (pdf). Though the Year of the Dragon is traditionally considered auspicious, there are likely to be countervailing forces at work, CLSA says. The reason: This particular dragon year is associated with water, which is far less lucky for investing than other elements like fire and metal.
The index predicts a positive end to the year, especially in October and November, when the metal element dominates. CLSA is clear that their Feng Shui Index is meant to be “tongue-in-cheek,” and issues several disclaimers such as this one: “To be fair, feng shui’s original purpose was to locate auspicious burial spots, not call the twists and turns of the equity markets or individual sectors.”
The authors of the report also admit that they got last year badly wrong. The Year of The Rabbit was supposed to be especially good for playing the markets. “Lots of luck, if the Rabbit’s reputation is any guide,” they wrote a year ago (pdf). “And best of all for investors, indirect wealth such as market-made moolah will be the order of day.”
It didn’t turn out that way. The S&P 500 in the U.S. was essentially flat in 2011, while Hong Kong’s benchmark stock index, the Hang Seng, fell by over 19%. At least one prediction from last year turned out well: CLSA said that Kim Jung-un, based on his “water dog” astrological sign, would have a great year. That’s true, if you consider stepping into his father’s shoes to lead North Korea to be positive for him.
This year, Chinese Vice President Xi Jinping, a “water snake,” is tipped by CLSA to have just a “fair” year, but his horoscope apparently calls for a “job opening” in autumn. That seems like a shoe-in: Mr. Xi is universally expected to become China’s next top ruler during the Communist Party Congress in October or November.