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Hong Kong brokerage house CLSA has produced a Feng Shui note for its more superstitious clients. It warns of soft stock markets and a lot of volatility ahead, as well as a weak US dollar.
Leading Feng Shui master Raymond Lo suggests investors should be buying property, mining stocks and gold, and foresees 'a lot of corrections' in global stock markets.
2007 record
It is tempting to dismiss Chinese astrology as nonsense but have a look back at the article on the Year of the Golden Boar AME Info published a year ago.
If you had then taken the advice of the Feng Shui masters and rushed out and bought gold you would be sitting on a profit of around 40 per cent in a bad period for most investors. But there is solid logic underpinning these astrological predictions.
Remember that Lo sits in Hong Kong. So when he talks of property, that is in the context of Hong Kong, where the recent cuts in US interest rates are replicated due to the dollar peg, and therefore have a positive impact on real estate; but the same is also true for the UAE.
Gold again looks attractive in an uncertain world, with rising inflation and dollar weakness. But note the addition of mining stocks this year - a shrewd investment perhaps as mining equities have underperformed relative to precious metals and should be due for a catch up in 2008.
Stock gloom
However, there are other astrologers who told their clients to invest in Asian stocks in January, and after the worst start to the year for equities in history their advice has been less than worthless.
Investors always have to take responsibility for their own lives and realise that what goes up can also go down. Gold has been in an uptrend for five years and could well carry on with this general upward momentum in 2008. We could even see a price spike.
But in 1975-6, during the last decade-long gold bull market of the 1970s, gold halved in value after the 1974 stock market crash. You could well argue then that the stock market corrections of 2008 might precede another mammoth gold correction.
The good news, of course, in the 1970s was that gold recovered from its correction to rise eight-fold from its 1976 bottom. But who knows, for 2008 the Year of the Rat could prove another golden year!
See also:
2008 outlook for currencies, stocks and commodities
UAE stock crashes refocus investors into local property
Is the Middle East stock market rally over?
Peter J. Cooper
