Year of the Horse – Industries to Avoid?

Take a stroll down Chinatown now and it’s likely you’ll see throngs of people and a bustling street. And why shouldn’t that be the case? After all, the Chinese New Year is just round the corner!

It’s one of the most important festivals that the Chinese around the world celebrate, and is meant to signify a fresh start for the year ahead.

Besides red packets and New Year Goodies – think bak kwa (for those not fortunate enough to have tried it, it’s thinly-sliced pieces of succulent barbecued spiced pork) and pineapple tarts – I don’t think I’ll be too far off the mark to say that Feng Shui predictions for the upcoming year would likely be at the forefront of people’s minds too. And, these predictions can cover a wide range of topics, from an individual’s love life and work prospects, to US politics!

Naturally, money matters would also be given high importance and for those with an interest in the stock market, some industries that Feng Shui experts aren’t so crazy over include the “metal” and “water” industry, specifically: Shipping, Transportation, Logistics, Distribution, Tourism, Oil, Money Lending, Timber, Printing, Universities, Publishing, Education and more.

We’ll be looking at more Feng Shui-related stock market predictions in our “Year of the Horse” series in the coming weeks, but based on the forecasts I just mentioned, it would seem that companies like Yangzijiang Shipbuilding Holdings (SGX: BS6), Global Logistic Properties (SGX: MC0), SembCorp Marine (SGX: S51), DBS Group Holdings (SGX: D05), and Overseas Education Limited (SGX: RQ1) might not seem like good bets at all for the coming year. After all, these companies belong to the ship building, logistics, oil & gas, banking, and education industries respectively.

But before you rush out to act upon these suggestions, slow down and take a step back.

These predictions, even if proven true, are usually for the year ahead. My colleague David Kuo once wrote that “[Rather] than focus on one year’s underperformance, we should remember that stock market investing is a marathon, not a sprint.”

One year’s worth of bad share price performance might just drive a share down to bargain levels and that is when an investor who’s focused on business values can take advantage of depressed prices to maximise his long-term gain.

Over the long-run, a share price’s performance becomes tethered to a company’s corporate performance. And the latter is something we can only gain a grasp at through an understanding of a company’s financials and business prospects. After all, it’s a company’s long-term corporate performance that ultimately affects the share price.

That said, Feng Shui forecasts for the performance of various groups of industries might just coincide with their fundamentals. So, stay tuned next week for more as we look at what might be in store for the rest of the Year of the Horse in 2014.