WSJ Stock Calls, Feng Shui-Style

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HONG KONG—The new year could be a tough one for property and building-materials stocks, while shares of shipbuilders and other water-related investments could pay off.

That's according to brokerage CLSA Asia-Pacific Markets, which on Wednesday released its annual CLSA Feng Shui Index report, an investment forecast for the coming year based on the Chinese belief system. Such forecasts have proven to be popular in Hong Kong, where buildings are still designed with feng shui principles in mind.

CLSA, an Asia-focused arm of France's Crédit Agricole SA, said in its report that investors should "bear in mind that, as always, it's offered with our tongues firmly in our cheeks."

CLSA's Feng Shui Index calls for gains in the Year of the Rabbit.
FENGSHUI
FENGSHUI

Wednesday's report was based on the upcoming Year of the Rabbit, which begins Feb. 3. Noting that rabbits are "energetic, active, alert and tame" though "at times cowardly," CLSA said the year could be a volatile one for investors. "Still positive on the Hang Seng, but even more ups and downs than last year!" it said, referring to Hong Kong's benchmark stock-market index.

According to the forecast, stocks will get off to a rough start until a spring bounce takes the market back into positive territory. "Still many reasons to be cheerful, but be Boy Scout-prepared as well," the report cautioned. A stronger recovery will arrive in the summer, with July an especially auspicious month, it said.

In general, CLSA said, the year will be a positive one for investments in metals, financial companies and airlines and other transportation stocks—in part, it said, because "metals and water are hot" during the year. Gambling stocks will do well too, but the market will be less exciting for real estate, building materials and other "earth-related sectors."

CLSA noted that the upcoming year will be one of the Metal Rabbit, meaning it will have more resilient characteristics. It noted the last Metal Rabbit year was 1951, when the Dow Jones Industrial Average rose 6.7%.

The report concluded that its forecast for the year currently ending, the Year of the Tiger, was basically correct, though it missed an end-of-year downturn for the Hang Seng Index.

Write to Carlos Tejada at carlos.tejada@wsj.com