March 9, 2015

For the old faithfuls like myself, the CLSA Fengshui Index for the Hang Seng Index (HSI) is the annual must-read along with the Stock Trader’s Almanac for the S&P 500, not taken seriously as much as it is a ritual to complete for the lunar new year, even if most of its contents are forgotten as the year wears along.

This year of the Wooden Goat or Sheep, depending on which you prefer, is no exception and I found myself dusting off last year’s copy for a scorecard and to my amazement, the results are not bad overall.


CLSA Prediction for the HSI last year

Actual performance of the HSI came pretty close, for once.


That drop in September has been uncanny and I am kicking myself for having forgotten clean about it then.

Yet if you had bought on the Wooden Horse concept stocks in the Fire industry which includes accounting, advertising, energy, fast food, foundries, internet, oil & gas, petrochem, power, technology, telecom, utilities, hmmmm. The internet and technology should cover the oil & gas losses, probably?

As for the weak Earth sector stocks in agriculture, building materials, property, construction, soft commodities, pharma, soft commodities, cosmetics last year, the verdict is rather accurate except for pharma, of course, where we surely did not expect takeovers to account for the big gains.

I am raring to go for 2015 because the prediction is for a non stop rally till June and it is time to hitch on those trading boots to go for that long hike uphill, perhaps after the FOMC on the 19th where we shall hopefully have a benign sounding Federal Reserve, regardless of Friday’s astounding Non Farm Payroll numbers which appear to be the only bright spot in the sea of poor economic data surprises lately.


US Economic Data Upside Surprises

Presenting the Wooden Sheep HSI.


And so, Wooden Sheep is not the same as Wooden Horse but Metals and Fire will do well – hotels, jewellery, gold, silver, autos and electronics.

The second half will lag behind the first so it seems, then again, it depends on the sector you pick for I note that Financials will shine in August, Property in September, Commodities in October, Retail in November and so on.

For all the gentle tame kindness that the image of a wise old goat summons, we have to remember that the last SARS epidemic of 2003 which was the year of the Goat as well. Some fengshui masters claim it is because the fiery nature of the preceding horse year would tend to overpower the helpless lamb following it and indeed, 2014 has been a violent and volatile year filled with social unrest, air accidents, disease and pestilence.

I am writing and wondering where does Apple fit in this because err, I have just procured a new iPhone 6 and am feeling rather smug about it, having upgraded from an iPhone 3G, an antiquity in the smartphone world.

Apple will be unveiling their iWatch on 9 March, a cutting edge gadget that is supposed to change our lives as much as what was it last year ? Google Glass? which has been discontinued since Jan this year mainly because it is just, perhaps, slightly ahead of its time with security and privacy issues that cannot be policed.

Could it be more auspicious, though, for the iWatch launch that Apple has just been included in the Dow Jones Index on 6 Mar, the Friday before ? Replacing AT&T on the index, Apple shares have risen 45% over the past 12 months, as the iPhone overtakes the world and they are the largest company in the world being the first to surpass US$ 700 billion in market capitalisation.

Surely it was inevitable when AT&T has a market capitalisation of US$176 billion compared to Apple which is holding US$ 178 billion in cash alone?

For me, this has not been a given for if we cast our memories back 2 years, you would have been singing the Samsung tune as the Android phone took more market share with 43% of market profits even as Apple made 57% with a smaller market share. Today, Apple rules taking up to 89% of market profits, looking quite unstoppable in the near future.

Can Apple continue their market dominance if Chinese government departments stop buying their products, along with Cisco and Intel?

Samsung was all the rage in 2013 but has now fallen grace, simply unable to match Apple in market appeal even if their new Galaxy phone is chock a block packed with more features than the iPhone 6.

Their share prices reflect the change of fortunes.


This will be Apple’s year and it remains the biggest holding for hedge funds and all the investment portfolios out there. Nothing is able to topple it from the winner’s podium at US$737 billion in market capitalisation with Google, the next largest company in the world, trailing far behind at US$388 billion.

Being founded in the year of the Dragon, Apple looks set to ride the tides of good fortune in the Sheep year if Chinese astrology will have their way. Upon checking out Samsung, born in the year of the Tiger, I found that their fortunes look even more watertight than for the Dragon, ranking first for all the Chinese animal signs.

I like the iPhone 6 and my unshakeable faith in Apple since 2009 when I bought my iPhone 3, joining more than half of American households who own at least 1 Apple product.

As for its stock price and its currencies losses that are costing them more than what Google makes in a quarter, coupled with Xiaomi’s dominance in the Chinese market , I would join the rest of the sheep to bleat a MEH tune.