In 2011, be ready to run
The Year of the Rabbit looks set to follow in the footsteps of the tiger, bringing some good moves for the economy but danger, too, as the dragon gets closer.
Only a suicidal rabbit would chase a tiger. But that's not the case in the world of Chinese astrology, which this year predicts the rabbit following, if a little cautiously, the tiger and in doing so bringing us a year very much the same as 2010 in terms of stock market twists and turns and economic recovery.
The reason: 2011 is the Year of the (Metal) Rabbit. The rabbit is considered a wood sign, which makes it a metal wood year - exactly the same as last year's metal tiger.
According to fung shui master and Chinese astrologer Raymond Lo, this means 2011 will in many respects see a continuation of all that happened in 2010. Industries that flourished last year will fare well, gold will advance, albeit more moderately, and the market will generally go up.
However, there is one big difference between 2010 and 2011. This year is a yin year and therefore carries with it the more gentle influence of the female yin - compared to last year's yang tiger.
The rabbit is the fourth of the 12 animals in the Chinese zodiac. There are also five basic influencing elements - metal, water, wood, fire and earth - which alternate, making the Chinese zodiac a cycle of 60 years. There is also the influence of yin, with its female characteristics, and the stronger male yang.
Lo says this female influence of the yin will weaken the optimism which flourished and helped drive the economic recovery last year, and although the economy will continue to improve, it will do so at a slower pace and with some minor setbacks.
'The rabbit, like the tiger, is wood, and wood is considered the mother of fire. Banking is metal and it needs fire to melt it into useful tools, while finance and the stock market are related to fire, which generates optimism. This means fire is supportive of the economy, which is why the financial market did well in 2010,' Lo says.
Like the tiger year, 2011 also sees the disharmonious pairing of metal and wood. Throughout history, the yin metal rabbit has been associated with conflict, espionage and assassinations - all of which can effect the economy.
The Korean war broke out on a yin metal rabbit day, while the Battle of Austerlitz in the Napoleonic war was also a yin metal rabbit day, Lo says. King Abdullah I of Jordan was assassinated in the last yin metal rabbit year of 1951.
But how does this pairing of yin, metal and wood affect the man on the street pondering where to put his money this year?
According to Lo, those looking to the stock market should learn from the tiger year.
'Industries that will do well this year are similar to those which did well last year. Metal over wood is favourable to fire and earth industries. Fire industries are entertainment, and anything related to energy, while the earth sector includes property, mining, chemicals, insurance and hotels.'
Gold, which did extremely well last year, rising some 28 per cent, will continue to do well, Lo says, although moderately because of the weakened fire.
'Gold is a metal business which performs well when fire is present. Banking, machinery, engineering and hi-tech industries are also metal. But metal industries will not be as strong as last year because of the weakening of the fire. Metal needs fire to forge it into useful tools.'
Lo predicts 2011 will not be such a good year for wood industries - such as textiles, paper, media and furniture - because the fire may be too weak to make the wood useful, while water industries - such as shipping, communications and transport - should advance moderately.
Lo's views are echoed in part by the experts behind the annual CLSA Feng Shui Index. The index warns this disharmonious pairing of wood and metal should lead investors to 'expect the unexpected' this year, 'although volatility should be less violent than we've seen on the tiger's watch'.
However, the index sees the year slightly differently than Lo in terms of which industries to watch, predicting a great but bumpy year for metal and a great year for water industries, good for wood and fire and bumpy for earth.
With regards to the stock market, the index predicts a bad start for the Hang Seng Index as the 'rabbit refuses to emerge from the hole while the tiger lingers'.
But by April things will be looking up, as wealth from the West spurs a market climb. The savvy investor should buy stocks in June, when the market will dip ahead of a sharp rally through July and August, it says. Autumn will bring another dip before the market begins a steady climb in October and November, only to fall again in December before ending the year on a high next January.
Lo advises caution for the latter part of the year because of the impending arrival of the water dragon, a powerful water year which could extinguish the fire and optimism that fuels economic recovery and stock markets, instead instilling fear among investors.
'From August, people will have to be careful because the fire this year is weaker than last year and the coming year is a very powerful water year, and while fire represents optimism, water represents fear.'
Water years are not good for the stock market. The financial tsunami occurred in 2008, a rat year, also a very powerful water year.
So with this in mind, investors would be wise to take their lead from the rabbit at the end of the year: keep your ears and eyes open for danger and be ready to run.