Icy wind blows at exchange despite warmer January The investment climate has been the direct opposite of the changing climatic pattern this year. While global warming is giving us spring-like weather in January, the stock market is spreading winter chills. Out of eight trading days so far this year, six found the Hang Seng Index in negative territory. Despite the Dow Jones Industrial Average showing some signs of a rebound in the past two days and a general upward movement for the Shanghai Composite Index, Hong Kong stocks still came under heavy selling pressure this week. HSBC, the bluest of blue chips, was at its lowest in more than two years. So, does that spell bad fortune for months to come? Citigroup yesterday published a report examining how a decline in the first few trading days could hurt the market's performance for the rest of the year. Accordingly, it will not bet much on local stock performance in the near future. Data of the past 20 years show the Hong Kong market usually rebounds in the first quarter after a poor start. Things are a bit trickier on the mainland, where 63 per cent of the time a poor beginning would spell a bad year. This year, after heading down slightly in the first five days, mainland markets recovered and seem to be heading for a strong year. Regionally, eight out of 11 countries saw markets decline this year to date, apparently heading into the headwinds in the Year of the Rat, as Merrill Lynch predicted. It still sees strong regional financial markets, giving Hong Kong the heaviest weighting in the Asia-Pacific. So, perhaps more people are turning less bearish, but that's no sure bet on a good year. Ace looks through the haze Even if you are a top analyst, the chance of getting it right is still like tossing a coin. Spare a thought for former Morgan Stanley analyst Byron Wein, who developed a habit of producing 'Ten Surprises' every year for some 20 years. The surprise this year came from the tepid media reception, as only a few picked up his predictions for this year. A quick check on his last set of forecasts revealed that, while spot on with his bullishness on crude oil and gold, he was too optimistic on the United States and Japanese markets. In other words, his hit rate is as good as anyone's. But his predictions for this year seem to have been on target so far. He foresees stagflation with the US fed funds rate at only 3 per cent, the American unemployment rate at 5 per cent, and the S&P 500 dropping 10 per cent. If his forecast is anything to go by, gold will touch US$1,000 per ounce and oil will fetch US$125 per barrel this year. His pronouncement on China is bearish. While the US recession may hold back the mainland economy only modestly, its stock market will decline sharply, he believes. He expects the yuan to be revalued upwards by another 10 per cent to control inflation and appease foreign governments this year when Beijing hosts the Olympic Games. Financial markets aside, his crystal ball shows several long-distance runners refusing to compete in certain Olympic events due to air pollution in the capital. Did we not see just the other day the Swiss dressage events to be held in Hong Kong? Fake filing fails to flatter Imitation is the highest form of flattery. But, it may not be so for top guns in the China/Hong Kong airline industry. We have received an e-mail detailing the China National Aviation Corp/Air China/Cathay Pacific offer to buy additional H shares from China Eastern Airlines at HK$5 per share. The e-mail was sent from a hotmail account and diverted to a mainland newspaper address. The four-page announcement, resembling a real stock exchange filing except for showing no date and no signature of any director, stated that Cathay will own 15.7 per cent of China Eastern H shares while Air China will take 8.3 per cent. CNAC and Cathay denied they had issued such a statement. It is amazing just how fast internet users can fake a document and spread untruths, considering that it was within three days after the Singapore Airlines/Temasek offer flopped. The lawyers are expected to table a deal from the CNAC camp within two weeks. They had better be quick before more pranks are played on the media - and investors.