CLSA sorcerer conjures up rosy outlook for the new year
Hong Kong's stock market, snoozing of late, could use a loud wake-up call from the Rooster, which will replace the cheerful but volatile Monkey next week as the patron of the Chinese calendar.
Bringing with it the lucky elements of gold and earth, the loudmouth king of the coop promises a third straight year of gains for the Hong Kong market, although the start of the year is likely to be challenging as it will be dominated by fire, according to CLSA's 14th annual Feng Shui Index.
'Hong Kong's natural element is wood, and since fire burns wood it could be a bit turbulent,' said CLSA's Wicked Sorcerer of the East.
Ominous indeed, especially since past Rooster years have frequently been marked by bloodshed, including the dropping of atomic bombs on Japan in 1945 and the first terrorist attack on the World Trade Center in 1993.
But fire is good for telecommunications, technology and utility stocks and the market will attempt to advance despite the challenges, added the sorcerer - also known as investment analyst Chris Zee.
The key is not to be too greedy and to take profit before an expected tumble around the middle of the year. 'The Rooster can jump, but it does not fly,' Mr Zee warned.
As gold and earth - directly linked to banks and property stocks - take over in the second half of the year, Hong Kong's fortunes should improve again, according to the index, compiled after consultation with real Feng Shui masters.
Residential property prices will rise another 25 per cent and gold will reach US$600 per ounce.
Staple sectors such as manufacturing and textiles would also do well in the second half, and as the forthcoming Year of the Dog started to wield influence late in the year, the market would be allowed a more sustained run, said Mr Zee.
As the breeze of fortune had changed direction and now blew east, and the west headed into two decades of decline, the US dollar would continue to tumble, the Wicked Sorcerer predicted.
While this projection may bode ill for the controversial West Kowloon development, the sorcerer stressed that the site still belonged to the east and should see as much luck as the rest of Hong Kong.
While the geomancy masters declined to set a specific target for the Hang Seng Index, CLSA research head Amar Gill said the bank was looking for a peak of 15,850 points this year. That translates into 17 times average forecast earnings for this year and next and would allow for 16.7 per cent upside from yesterday's close.
Cock sure
Fire and wood elements promise turbulent start to 2005
Trade will be more sustained as Year of the Dog beckons
Hang Seng Index will see a peak of 15,850 points this year
