CLSA: These sectors will strut in year of the rooster

How to invest during the year of the rooster

The Year of the Rooster is approaching and the shifting Feng Shui should bring a "gong xi" for the gaming, renewables and transportation sectors, CLSA said in its annual tongue-in-cheek Lunar New Year report.

Gong xi fa cai, essentially "happy new year," is the traditional Lunar New Year greeting in Mandarin, while Gong hey fat choy is traditional in Cantonese.

But CLSA noted that its Feng Shui master had warned that the Earth, Wood, Water, Fire and Metal elements will cycle through the year, suggesting shifting sector picks.

"In general, our Rooster predicts fiery returns for gaming, transport and renewables for the overall year, cautioning not to put all your eggs in one basket unless you want scrambled results," it said.

But it advised sector rotation throughout the Lunar New Year, which begins January 28.

"We can expect scraps from both gaming and transport from May through July, with the tables turning by November/December. Oil and gas, utilities, tech and telcos will shine mid-year, but produce scant pickings by the second-half," CLSA said.

"The spring chicken is true to its name in terms of healthcare/pharmaceuticals, which is the Rooster's top sector pick in April, while renewables strut their stuff in August."

CLSA's Chinese-zodiac inspired outlook also examined the outlook for Hong Kong's stock market.

"In 2017, after scratching aimlessly for the first couple of months, the Hang Seng claws its way upwards, to rule the roost around July/August," it said. "After a few ups and downs, by November/December the Earth Rooster loses his grip, but still manages to end the year on a higher perch overall."

Cherry Ma, CLSA's senior technology analyst, told CNBC's "Squawk Box" on Thursday that the timing for when to invest in different sectors depended on the interplay of the five elements.

"The early bird gets the worm," she said, noting that the Hang Seng would likely peak around midyear, led by "fire" sectors, such as technology and internet plays.

For the year overall, she expected earth elements would dominate. While the year is a fire rooster, fire forms earth by creating ashes, she noted, likely leading the property, renewable and resources sectors to advanced during the third and fourth quarter of the year.

CLSA noted that last year, the year of the Monkey, its Feng Shui master had expected the Hang Seng Index would face "plenty of monkey mischief."

It noted that it accurately predicted the index would rise from February to March, but added that "someone spiked the coconuts" in April-May. CLSA's Feng Shui reading had also accurately tipped the index's plunge on June 24, the day after the Brexit vote.

This year's Feng Shui note also looked at Hong Kong's property market, picking the best quadrants of the city.

"The Rooster prefers to nest in the North, while the lower Peninsula also looks reasonable to our feathered friend. North-East and North-West are also good choices, but poultry returns are expected elsewhere, especially directly South and East," it said.

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

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