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Will Year of Goat give Hong Kong the kick?

CLSA dishes out feng shui trading strategies

The year of the goat may take the Hong Kong stock market on a bumpy ride, CLSA said in its annual feng shui forecast ahead of the Lunar New Year.

"According to the Chinese zodiac goats are harmonious creatures, but be prepared for the typically affable goat to reveal his gruff side this year," CLSA said in its tongue-in-cheek report.

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The ancient science of feng shui, aimed at creating balance, is usually used to position objects and in architecture, but the more superstitious believe it can divine the future, sometimes incorporating the 12 Chinese zodiac animals and the five elements of water, metal, fire, wood and earth.

Bumpy ride

In applying feng shui to the outlook for the year of the wood goat to the Hang Seng Index -- which has an earth rooster sign -- CLSA sees bumps ahead.

"Our favorite Earth Rooster, the Hang Seng Index, will not perform spectacularly this year as the rooster clashes with the goat, causing it to falter, " it said, forecasting a "precarious" and volatile path.

"The earth rooster will have some financial entanglements early, peak in the middle and softly touch down," it said.

Not all bad

But not all stocks will perform badly, and CLSA's top sector picks are "cashmere" plays on renewables, commodities and property.

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The wood goat is set to kick in a recovery in the beaten-down commodity sectors, it said.

Read More Chinese can't say neigh to feng shui in year of the horse

"Wood is the progenitor of fire and thus, with a ready supply of wood, the fire can burn for longer," it said. That means oil and gas will recover, and utilities and tech plays should rise, it said.

"Troubles this year come from the earth, but metals and fires will flourish, prompting hotels, jewelry, gold and silver, autos, electronics and firecrackers to explode," it said.

With the wood goat known for compassion, CLSA tips stocks in "Guanyin-related" industries -- or those related to a mercy deity -- to do well, including preventative medical stocks.

Earthy second half

In the year's second half, it expects the earth element will become more prominent, potentially spurring new infrastructure investment.

But the year ahead doesn't look to be harmonious.

"The Wood-Goat year is presided over by wood and earth, and the former will restrain earth's power," it said. "People will be ornery this year. Don't expect full-scale office wars to break out or an Occupy-the-water-cooler struggle, but it's certainly a good year to be on guard and not get fleeced."

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter

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