CLSA Fengshui Chart 2015

The Year of the Goat will bring slow improvement but also uncertainty for the Hong Kong stock market and economy, according to investment bank CLSA's annual Feng Shui Index.

The goat's characteristics of slow, steady and hesitant movement will replace last year's galloping horse, CLSA says in its 12th annual tongue-in-cheek report, entitled 'Capricorn Rising'.

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Hong Kong will start to pull out of a long period of bad luck that coincided with the handover in 1997, riding along on the mainland's coat-tails as the country is set to enter an eighth 20-year lucky period in 2004, according to the index. That bodes well for China-related stocks, said Kenny Lau, a technology analyst at CLSA.

'China will see very good luck in the next 20 years,' Mr Lau said. 'You must buy China - China, China, China.' On the other hand, 'Hong Kong will not be totally out of the woods until 2007'.

To compile the index, the bank consulted three feng shui masters to come up with predictions on how the Hang Seng Index will perform and which stocks to pick, along with more humorous predictions on politicians and famous people. Mr Lau warned: 'As I say every year, don't take this index too seriously.'

The index began as a way of filling space on CLSA's Lunar New Year cards to clients in 1992 and has since become an annual event, with Mr Lau and colleagues taking to the stage in the China Club yesterday dressed in traditional Chinese robes with the bank's blue and yellow colours.

On a more serious note, CLSA's chief economist, Jim Walker, gave his year-ahead forecast for Hong Kong, saying: 'We are much more optimistic about Hong Kong than the feng shui masters are.' Dr Walker expects growth to pick up this year, with gross domestic product expanding 4.6 per cent and 8.2 per cent next year as exports continue to boom and business investment recovers.

Meanwhile, deflation, which hit its 50th month in December, 'begins to disappear', he said.

Mr Lau said earth and water elements were prominent in the Year of the Goat, a bad sign for the housing market and developer stocks.

'Water is going to turn earth into mud. That's why we don't expect property prices to rise,' he said. Gold and fire elements 'are okay', he said, so 'it is no problem to invest' in financial and bank stocks.