The Wall Street crash and the start of the Great Depression took place in a snake year of 1929. AP Photo
The Wall Street crash and the start of the Great Depression took place in a snake year of 1929. AP Photo

Year of the Snake not so venomous



The Year of the Snake is upon us and, now that the fireworks have died down across China, market players will be turning to their analysts to see what this year has in store.

Will this be a boom year for the financial markets in China or are things looking difficult?

A surprising number will be turning to fortune tellers to see what the ancient art and belief of feng shui has to say.

Feng shui, which translates as "wind water", is the Chinese practice of arranging objects and choosing dates to improve luck. The thought system includes elements of geomancy, astronomy and folk wisdom and is linked to the 12-yearly cycle of zodiac animals.

China's economy grew by about 7.8 per cent last year - the lowest rate since 1999 - and some forecasts for this year, such as those from the Organisation of Economic Cooperation and Development (OECD), are for relatively slow growth to continue.

According to the HSBC services purchasing managers' index, growth in China's services sector hit a four-month high last month, as a better business climate increased deal making and lifted corporate confidence to an eight-month peak.

Fortune tellers reckon the Year of the Snake is looking volatile, but they don't believe its venom will bring disaster to the financial markets as it has in previous snake years.

It's worth remembering that in Chinese mythology, the snake embodies wisdom, and people born in the year of the snake are meant to be intelligent and wise.

In fact, key indexes could slither higher this year on the back of growing optimism, say the feng shui experts.

Some of the most disastrous financial events have taken place during snake years, which are traditionally associated with chaotic events and disorder.

The Wall Street crash and the start of the Great Depression took place in a snake year of 1929, the September 11, 2001 attacks did too, and the harsh government crackdown on pro-democracy demonstrators in Tiananmen Square in 1989 likewise.

Snake years have been characterised by lower endings on stock markets - the three most recent snake years resulted in Hong Kong's Hang Seng Index finishing lower, down 33.5 per cent in 2001.

At this time every year, the brokerage CLSA releases a "feng shui index".

The report is based on the signs of the Chinese zodiac and features lighthearted predictions for financial markets. It is written with tongue firmly in cheek, but CLSA's feng shui analyst, or "sorcerer's apprentice", Mariana Kou, believes there are signs of optimism.

"We've got the fire element so we're pretty hopeful," says Ms Kou, predicting a "decent finish" to the end of the year.

She says there is "good balance on the five fundamental elements" - fire, water, earth, metal and wood - which should rein in any significant upheaval.

"As befits 'skin-shedders', snake years are marked by major transformation and change, and sometimes great upheaval," CLSA says, while emphasising its research is based on "bottom-up" fundamentals.

The Hong Kong feng shui master Raymond Lo Hang-lap is decidedly upbeat on the outlook for this snake year. "We will see a lot of positive energy coming and people will have more confidence in economic recovery," he says, adding that this year's variety of snake is a relatively mild, less venomous kind.

"The stock market is already going up. Even stronger fire will come in 2014, the Year of the Horse, and that means longer-term recovery could be quite substantial and will last for a few years," he says.

The snake year "is more moderate, humble and patient", Mr Lo adds, saying he is bullish on this year's prospects for the world as a whole and sees good opportunities for economic growth.

Geomancer projections aside, China trade data from last month showed exports gained 25 per cent from a year earlier and imports rose by 28.8 per cent. So analysts who do not rely on feng shui believe recovery is on track in the world's second-biggest economy. All the same, feng shui should never be underestimated - the economist He Fan says it has a symbolic importance, reflecting how Chinese politics works.

Looking to hard data, one of the first pieces of news in the Year of the Snake was the revelation that China overtook the United States to become the world's largest trading nation last year, based on the sum of exports and imports of goods.

Data from the US commerce department showed American exports and imports of goods last year totalled US$3.82 trillion (Dh14.03tn), while China's customs administration reported last month that the country's trade in goods last year amounted to $3.87tn.

China is certainly gaining but it still has a way to go. The US economy is more than double the size of China's, according to the World Bank, with GDP in 2011 of $15tn, while China's totalled $7.3tn.

Still, in this Year of the Snake the scales will shift again.

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