Feng Shui Masters at Odds Over Prospects for Year of the Horse

The Year of the Horse, which begins Friday, is a dangerous one for investing, according to Master Koon, a Hong Kong-based feng shui master.

The Chinese zodiac runs on a 60-year cycle, as the 12 animals occur in combination with each of the five elements of traditional Chinese cosmology: wood, water, fire, metal, and earth. The wood horse, which is up this year, represents instability and disruption, Master Koon said. A previous wood horse year, 1894, saw war break out between China and Japan hardly an auspicious sign.

Property, the stock market, the economy, politicstheyre all unstable, said Master Koon. So investments need to be conservative.

Master Koons analysis flatly contradicts that of brokerage CLSA, which argued in a recent report that the Year of the Horse would be a good one for stocks. Based on its own survey of five feng shui diviners, CLSA calculates the Hong Kong stock markets benchmark Hang Seng index will likely rise 28% over the next year.

It seems the masters of feng shui are no more in agreement than professional economists, whose prognostications for Chinas growth vary from an export-driven resurgence to financial meltdown. It isnt clear which profession has a better record of forecasting.

It is pretty common for feng shui masters to have different views, said Mariana Kou, a CLSA stock analyst who worked on the firms report. Its more of an art than a science.

Whats not in doubt is that this year China will have to work through a series of economic challenges, from mounting local government and corporate debt to a property boom that is putting home-ownership out of reach for many first-time buyers. The near failure of a 3 billion yuan ($496 million) investment product, bailed out at the last minute earlier this week, raised the specter of financial turmoil as years of bad investment start to be exposed.

Most economists expect growth to come in a little below last years 7.7% pace, but the risk of of a debt crisis means there is a chance of much worse performance.

Still, a look back at previous turns of the zodiac cycle shows how far China has come. The last year of the horse, roughly coinciding with 2002, was a good one for Chinas economy. Having joined the World Trade Organization in the last month of 2001, China suddenly found its trade soaring as other countries dropped import barriers.

The economy moved up a gear, making 2002 the first of six years of accelerating growth that ended only with the financial crisis of 2008. The impact on living standards for ordinary people has been profound.

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Feng Shui Masters at Odds Over Prospects for Year of the Horse