Economic forecasts point to renewed stocks battering - both locally and in the region - as New Year dawns

The annual round of economic forecasts that accompanies the start of Lunar New Year has predicted more woe for stock markets in the upcoming Year of the Snake. Investors looking for better news following the recent sluggish performance of the Hang Seng Index have been advised to expect further volatility.

Leading the way was HSBC's chief investment strategist Eugene Chung who said: 'It is still too early for the region in terms of the angel signs we are looking for to buy'.

His views were echoed by Credit Lyonnais Securities Asia's (CLSA) annual Feng Shui Index, which predicted some fear in the year ahead. While the 'slithering asp' should bring an end-of-year rally, the Hang Seng Index is expected to remain within its current range limits for much of the year.

Hong Kong's economic prospects are also muted. HSBC's Asian economic outlook for this year said 'Hong Kong's safe haven status is at risk'. With falling interest rates and a stable Chinese economy originally expected to benefit Hong Kong, the bank's economists now argue that this is not necessarily true.

'Exports have been the critical factor in driving economic recovery in Hong Kong and the resulting net export surplus has provided liquidity that has supported asset prices,' the report said.

A drop in exports, therefore, would lead to a liquidity squeeze that could hamper Hong Kong's economic recovery.