HONG KONG: Investment bank CLSA has issued its annual Fung Shui Index-based market outlook for the year ahead, which sees the year of the "golden tiger" as predestined with dramatic uncertainties and turbulence, like the tiger itself, in equities, commodities and property.

CLSA's believes that the equity markets will be volatile, with a surge in the first month followed by a drop that turns upwards in June, dips, and then swings up again in September to see the golden tiger roar by January next year.

The Fung Shui Index indicates that the impulse and risk in 2010 is due to the year's animal zodiac sign, the tiger, which starts to take charge and its heavenly stem or influence of metal - the reason why many people refer to it as the golden tiger - and earthly branch of wood will typically conflict with each other and set the year on a path to more upheaval than usual.

"We expect Hong Kong to be positive this year, but it will be volatile. February should be a good month, but then we could see volatile markets until the second quarter when the market should consolidate and then rally," said Francis Cheung, Head of HK/China Strategy, CLSA.

The previous year of the "golden tiger", indicated in the report, was 1950, when the Dow Jones Index gained significantly and ended the year on a high.

Cheung said for the first half of the year, investors should be cautious and select stocks that they like and be ready for a good entry point in mid-year. The forecast emphasizes consumer, internet, industrials, healthcare, oil and exporters sectors for investors.

With this tiger year's heavenly stem being metal, the index suggests gold is set to have a great run and predicts that it could break US$2,000/oz. Commodities regarded as "wood", such as pulp and paper, clothing and pharmaceuticals and "fire" and "earth" elements including technology, power, telecoms and property are believed to have a good year in the offing.

"Water" related sectors, including shipping, airlines, logistics, autos and transport, however, are said to be challenged and in transition to a bumpy time according to the index.

"The Hong Kong property market was up a lot last year, so gains will be much lower, especially with China tightening. I still think there will be an upside of about 10 percent, but you may get better gains in the mass market, rather than the luxury market," Cheung suggested.

In terms of the animal zodiac, the index said it will be a great year for those born in the years of the dragon, sheep and particularly, the horse, while it will be a bumpy ride for tigers, snakes and monkeys.

(HK Edition 02/04/2010 page4)