Mon, Feb 15, 2010
The Straits Times
By Dawn Zeng
IF YOU are an investor who likes a smooth ride with little volatility, it might pay to sit out the next 12 months.
That's because riding the Golden Tiger is anything but smooth.
Don't take our word for it. The wand bearers at CLSA Securities in Hong Kong have been crystal-ball gazing to compile their annual Fengshui Index on what lies ahead.
In short, it looks rough - and history, after all, is on their side.
They warn that the typically tumultuous Tiger years are not for the faint-hearted. Stock markets tanked in 1962 and 1998, the year of the Water Tiger and Earth Tiger respectively, then-US President Richard Nixon resigned over Watergate in 1974, and August 1998 marked the start of the Russian financial crisis.
But if you are armed with courage and conviction, opportunities abound, according to the CLSA gurus - who have nailed some trends previously but would readily admit that the tongue-in-cheek index has not always proved reliable.
Recall that some of their predictions for the Year of the Earth Ox last year were right on the money: Gold surged past US$1,000 an ounce and the market bottomed despite bearish sentiment at the start of last year.
Commodities to shine
With that in mind, note that metal is this Tiger Year's heavenly stem, so commodities of all stripes, particularly non-ferrous ones, should shine.
Gold looks set for another great run with prices likely to break through the US$2,000 an ounce barrier after a mid-year rally.
Silver is also expected to enjoy a spectacular run-up during the second half.
Avoid 'Water' element
While the future looks bright for metals, avoid sectors with the 'Water' element: Shipping, airlines, logistics and autos are all likely to hit bumps ahead.
But 'Wood' - pulp and paper, clothing and pharmaceuticals - will be fruitful.
It's all about timing, of course, but as the CLSA pundits point out, that will be hard to judge as the year ahead will be volatile with roller-coaster rides week to week and even day to day.
This first month of the Chinese calendar, which is the month of the Wood Tiger, will alone deliver plenty of fireworks.
There will be fantastic opportunities in the stock market for the sharp and quick-footed. As a rule, keep your head down and your eyes open.
Sell in May
And the choppy waters will keep roiling until May, so the stock market adage, 'Sell in May and go away', might have more resonance this year.
The CLSA index predicts market volatility with an overall downward trend before an uptick in June.
But fret not, says the guide.
Investors seeking solid value and sound fundamentals should have some pretty pickings to choose from in June and July following the earlier upheaval.
But be warned, the window of opportunity will shut fast with markets expected to head south again in August. That said, when the going gets tough, the bargain hunters go shopping.
September marks the beginning of what looks to be a string of positive months to round off this year, with October looming as one of the best this year.
Auspicious dates
Mark your calendars this year for Nov 17 and Dec 8, and Jan 16 next year, as these are regarded as especially auspicious dates.
There should also be a good bit of bounce left in the bourse before the bonny Year of the Rabbit hops into action.
In case the CLSA deep-thinkers were not far enough out on a limb, they have also divined that in fengshui terms, ace investor Warren Buffett - worth US$37 billion (S$52 billion) - is only now about to enter the most financially lucky period of his life.
All the signs point to the year ahead being one of his smoothest, although the 'Oracle of Omaha' is also advised to defer any new ventures until the final months as autumn's chill winds carry the danger of costly investment decisions.
Where that leaves the rest of us, who really knows.
Gong Xi Fa Cai. And may you see roaring success as you ride out the Tiger.
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