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Year of the Tiger: expect loud roaring
Last Sunday, 14 February 2010 was the start of the Chinese Year of the Tiger. I received lots of emails and text messages from my Malaysian friends with wishes like “May you have a roaring start for the Year of the Tiger” or “May your year ahead roar with success”. I am not superstitious but just for a bit of fun, I googled “forecast for the year of the tiger” to find out what this has in store for us. Michael Yip’s blog said
“Drama, intensity, change and travel will be the keywords for 2010. Unfortunately, world conflicts and disasters tend to feature during Tiger years also, so it won’t be a dull 12 months for anyone. The Year of the Tiger will bring far reaching changes for everyone. New inventions and incredible technological advances have a good chance of occurring.”
Other sites also concurred that the year will be full of drama and unexpected events. The last year of the tiger was in 1998 and at that time I was still living in Malaysia, one of the countries that was severely affected by the Asian Financial Crisis which began in 1997. Stock markets and other asset values plummeted and values of currencies slumped. After 30 years in power, President Suharto of Indonesia was forced to step down on 21 May 1998 in the wake of widespread rioting that followed sharp price increases caused by a drastic devaluation of the rupiah. In the Philippines growth dropped to virtually zero in 1998. The last year of the tiger sure wasn’t a dull year for me personally either. My youngest daughter was born in May 1998 and my marriage broke down three months later. I sure hope this year of the tiger will be less traumatic for me!
I can’t help but wonder how this year of the tiger will work out for China. Their stock market is closed this whole week because of Chinese New Year. The last time I looked at the chart of the Shanghai Composite index in December 2009, it was on the brink of breaking a 13 month uptrend line which started in November 2008. Since then it has broken below that trendline and other key moving averages as shown in the chart below. I have also drawn the Fibonacci retracement lines and you can see how it struggled but failed to push above the 38.2% retracement level. From a technical perspective, the chart does not look very bullish at all. From a fundamental perspective, China is also winding down on the stimulus spending that started in November 2008. The Chinese government has also recently asked their banks to tighten lending and increase their reserves. Unless a new stimulus package is announced in 2010, I don’t see much reason for the market to go up further.
The world is depending on China to lead the recovery. From the chart above, it looks like the Chinese investors themselves don’t seem to be that convinced about their recovery. Most global stock market indices have managed to reach at least a 50% retracement in 2009 but China barely managed to reach a 40% retracement in August 2009. Despite this gloomy outlook, I don’t believe this year has to be bad for those who are prepared. The Chinese term for “Crisis” is made up of two words “Danger” and “Opportunity”. Michael Yip’s blog also said
“For all of the Chinese horoscope signs, this year is one to be active – seizing opportunities and making the most of our personal and very individual talents. Everything happens quickly and dramatically in a Tiger year – blink and you could miss an important chance of a lifetime!”
So, expect the unexpected and seize opportunities that make the most of your personal and very individual talents. I wish you a successful Year of the Tiger ahead!
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