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updated: 2/6/2013 7:24 AM

Year of the snake promises calmer HK market

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Associated Press

HONG KONG -- As the Year of the Snake slithers into sight, investors should take comfort that the reptile's traditionally negative effect on stock markets probably won't be so big this year, according to the astrological predictions of a Hong Kong brokerage.

CLSA Asia-Pacific Markets released its annual "feng shui" index on Wednesday ahead of the Chinese lunar new year, which begins Feb. 10. The report is based on the signs of the Chinese zodiac and features lighthearted predictions for financial markets, property and celebrities. Feng shui is the Chinese practice of arranging objects and choosing dates to improve luck.

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"The snake is a skin shedder. That signifies radical changes," said Mariana Kou, CLSA's "sorcerer's apprentice."

The report noted that previous snake years have been associated with major turmoil such as the Sept. 11, 2001 attacks, the fall of the Berlin Wall and the brutal government crackdown on protesters in Tiananmen Square in 1989 and the start of the Great Depression in 1929. Stock markets have often ended lower in recent snake years.

However, in 2013 there is "good balance on the five fundamental elements," fire, water, earth, metal and wood, which should rein in any significant upheaval, said Kou, whose official title at CLSA is research associate.

The brokerage's predictions, focused mostly on Hong Kong's stock market, are strictly tongue in cheek but feng shui, which translates as "wind water", is followed religiously by many investors in the southern Chinese city in the belief that it will help boost wealth.

Emily Lam, another "sorcerer's apprentice" who in real life is an institutional salesperson, outlined the industries that would benefit in the year of the "black water snake."

"As the water snake enters the picture, she brings along a lot of water on heavenly stems. This will counteract with the earthly branches, favoring transport, logistics, shipping, gambling, tourism and infrastructure."

Lam said metal is also positive, boding well for banking and financials, currency trading, autos and commodities. Fire will be lackluster because of the "overwhelming effects" of water, so associated industries like oil and gas, telecoms, technology and utilities will suffer.

Garment, fashion, retail and other companies associated with wood will be relatively stable while earth-related sectors like agriculture, construction, property, building materials and resources will be disappointing.

Hong Kong's benchmark Hang Seng Index will steer a serpentine course, the report predicted, slithering to a high at the end of July before sliding to a low by the start of October. It's expected to zigzag further before ending the year higher.

Analyst Philip Chow acknowledged that the predictions aren't supposed to be taken seriously, saying that the firm's investment research focused on "bottom up" fundamentals.

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