Stock markets to be 'sluggish' in Year of the Dragon

Investors are unlikely to see fiery returns in the Year of the Dragon, which begins on 23 January in the Chinese lunar calendar.

According to an index based on feng shui released by investment firm CLSA, stock markets will be "sluggish" in the first half of the year.

It predicts that cement, property, and tourism stocks should fare well and that markets should pick up in August.

The brokerage releases the index every year.

Feng shui is the Chinese system of improving luck through the positioning of objects and predicting fortunes through dates and traditional Chinese texts.

"In Chinese history, the appearance of a dragon was a precursor to a great event and we think the year of the dragon will see an inflection point in financial markets," said Philip Chow, a transport analyst who moonlights as the company's feng shui expert.

Feng shui, which translates as wind and water, has a big following in Asia and many companies also pay heed to its principles when designing their office spaces and buildings to maximise wealth and positive energy.

Stocks markets were extremely volatile in 2011, the year of the rabbit, but Mr Chow said that investors would be less cautious and risk averse in 2012.

"The rabbit lived up to its reputation," Mr Chow said.

"It is cautious and gets scared easily. Last year it ran into a hole and didn't come out."

The dragon year will be a good one for those born under the sign of the rat, tiger, rabbit and monkey in the Chinese zodiac, while cows and dogs will have to take more care, the report said.

In particular, Queen Elizabeth, a tiger, will enjoy an auspicious year, celebrating her Diamond Jubilee having been on the throne for 60 years - a full cycle of the Chinese zodiac.

"She has begun one the luckiest periods of her life," the report said.

However, German Chancellor Angela Merkel, born in the year of the horse, could face a tough dragon year, with the index viewing 2012 as a make or break year for the European Union.

Companies linked to the water and earth elements, such as leisure, transport, property and agriculture, would perform well, said Mr Chow.

While sectors associated with fire, such as petrochemicals, telecoms and utilities, are expected to have an unexciting year, he added.