There's more to Hang Seng this year than a swing through the treetops Hong Kong stocks may have put in a good performance in the Year of the Goat, and although some goats do make it pretty high up the mountain, they don't often leave the ground. Enter the monkey - a cheerful, energetic animal in love with heights - and you will begin to get an idea of where share prices will be heading as we step into the Lunar New Year, if we are to believe CLSA's 13th annual Feng Shui Index. According to the bank's Kenny Lau, the Year of the Monkey is especially good for bulls, especially as bears are not even part of the 12-animal zodiac. In fact, last year's Sars outbreak marked the low point in the 10-year bad-luck period which befell Hong Kong at the handover.The tongue-in-cheek index suggests that the Lunar New Year will see fire and gold emerge as the two key elements. This will be good for technology, telecom, power and financial stocks. A strong influence of fire early in the year will, however, have an evaporating effect on the water element, which will bring volatility and consolidation to the market. From mid-May, gold and water will become more prominent - spot gold should hit US$5,000 per ounce - and kick off a recovery in property and financial markets. Historically, the monkey years have brought an array of mostly bad news from around the world, including the Tet Offensive in Vietnam and the assassinations of Martin Luther King and Robert Kennedy in 1968, the assassination of John Lennon in 1980 and, depending on your political leaning, - the election of Ronald Reagan and Bill Clinton as US presidents in 1980 and 1992, respectively. However, the Hang Seng Index has thrived in the past three Monkey years, with gains of more than 70 per cent in both 1968-69 and 1980-81. In 1992-93, the index was on its way to a similar performance, with a 40 per cent rise in October, when a deterioration of Sino-British relations pushed it off track to a 24 per cent gain on the year. A similar performance could bring the Hang Seng Index to 23,000 by the end of the year. This may be a good point in time to note that while fung shui is indeed a serious way to approach life, its implications for specific stock market levels may be less so. However, Chinese jackets cast aside, CLSA remains upbeat about the local market with an HSI target of 14,600 as 'a base case'. Given the abundance of liquidity and a China premium, it could reach 16,000, CLSA Hong Kong research head Amar Gill said. This optimism stems from projections that Hong Kong's gross domestic product will soar 8.4 per cent this year, that 'deflation is finished,' confidence will return and more links will be forged with China.
