Auspicious days are predicted for metals, while luck could flow from mainland to Hong Kong

A peaceful and harmonious ram has arrived and it could bring something of a hidden fortune, say feng shui masters.

On Feb 19, celebrations welcomed the Year of the Ram. This Lunar New Year is particularly auspicious for investors as it is linked with wood, one of the five elements of Chinese astrology - the other four being metal, water, fire and earth.

"When combined with wood, the Ram seeks peace and harmony," says Marco Yau, a research associate at CLSA, a Hong Kong-based equity brokers and investment group. "We don't think any particular sectors will do too bad this year."

CLSA has produced a Feng Shui Index every year for the past 21 years. While the brokerage says the index is somewhat tongue-in-cheek, it has often - but not always - matched the actual performance of various markets, including stocks and real estate.

The idea of using feng shui to analyze the elements and their impact is deeply rooted in Chinese culture. The aim of feng shui is to balance natural energy.

"We believe that if you put your money in the Hang Seng now, it is probable you will have some quite handsome returns by the mid-year," says Yau.

But this ram is unlikely to bring returns as high as it has in the past, he adds. "The earth (element) could restrain the power of this year, but metal and fire will flourish."

CLSA predicts that this lunar year is unlikely to be a spectacular year for the Hang Seng Index, but it should not be a bad one either.

The prediction is for the index to climb and reach its peak in July, but to start coming down around September, only to stay generally flat through the rest of the year.

When all is said and done, however, the alignment of the various elements suggests that the Hang Seng Index will end the year a little ahead.

The best-performing sectors are expected to be those related to the metal elements, including hotels, jewelry, gold and silver as well as automotive and electronics.

At the same time, property related to the Chinese mainland, as well as renewable energy and commodities, look good, thanks to a tendency toward what Yau refers to as "cashmere", the high-end wool known for its luscious softness.

But for investors following the Feng Shui Index, there are a number of sectors to be careful of - those associated with the fire element. These include industries such as oil and gas, gaming and technology.

Other sectors related to the fire element to watch out for, Yao says, are utilities, telecommunications and finance. All of these could underperform based on his reading of how the elements are positioned.

On a closer look, the first few months of the Lunar New Year look promising as the wood element feeds the fire and earth elements that are dominant in the "first leg" of the ram year. February, March and April are expected to be particularly good for investors.

As August, September and October bring in the "third leg", sectors linked to metal and water should improve, while the earth element declines and then rises in the last month.

For investors, this means that sectors like oil and gas could do well and gold should shine while companies in other sectors, like those linked to the Internet, could be made "crispy" by the fire element, which implies a lot of volatility.

The water element toward the end of the year and the "fourth leg" will dampen the earth element, so transportation, renewables, the Internet and finance should all strengthen during this period in November, December and January.

A word of warning though: Chinese mainland investments - including those linked to real estate and retail - could decline in this last leg and give back some of the gains from the first three months of the year.

During the last few months of the lunar year it might be best to avoid investments in these sectors.

Based on how this particular ram year is shaping up, fortune is expected to come from the north, so it makes sense that it could flow from the mainland into Hong Kong. One channel for this, says Yau, could be the Shanghai-Hong Kong Stock Connect launched last November, which allows global investors to access the mainland's stock market in Shanghai through the Hong Kong Stock Exchange.

The layouts of the elements would also be positive for an expected Shenzhen-Hong Kong Stock Connect program.

Looking back, previous ram years have been kind to the Hang Seng Index.

In 1991, it started around 3,400, powered upward to 4,000 by July, and hit 4,500 by the following January.

The next Year of the Ram, 2003, was more challenging. The index hit a bottom 8,442 in April as the outbreak of severe acute respiratory syndrome, or SARS, spread, but quickly rebounded and rose to 13,750 by January 2004.

The Feng Shui Index also looks at the prospects for property investments in Hong Kong. After some careful consideration, Yau suggests that it might be best for investors to avoid areas in Hong Kong's west. Based on the elements, locations in the east could be more promising.

The ram is the eighth of the 12 signs of the Chinese zodiac and stands between the horse and monkey. It is related to Chinese characters with generally good meanings such as luck and positivity.

(China Daily USA 03/02/2015 page15)