updated 12/21/2006 2:18:28 PM ET 2006-12-21T19:18:28

Forget fund flows and profit predictions, 2007 is about “fire sitting on water.” Buy oil, avoid metals, and don’t get your fingers burned.

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Feng shui experts steeped in the ancient Chinese knowledge of geomancy, or natural energies, see a turbulent year ahead for both markets and mankind.

“The elements -- they are in conflict,” said Raymond Lo, a practitioner for more than 10 years, whose office close to Hong Kong’s Victoria Harbor is considered a repository of positive feng shui energies in this hotbed of capitalism.

“Because it’s fire and water, and they’re not in harmony. So therefore next year in January, it’s not so peaceful.”

Lo expects a stock market boom in the first half of the year, with Hong Kong’s Hang Seng index likely to soar over 20,000 points, creating an “illusion of optimism” before a steep drop. The market is up 30 percent this year at 19,216 and, along with other Asian bourses struck record highs in 2006.

Hard data on the accuracy of feng shui forecasts and their performance against analyst predictions is hard to come by, but Hong Kongers devour books by the city’s celebrity feng shui masters.

“I believe in it a lot,” says retail investor Monica Tam, who reckons that in auspicious periods she can buy stocks “with her eyes closed” and still make money.

“Before I didn’t, but with each year’s experience and by seeing feng shui masters, I changed my mind.”

Another master, Edwin Ma Lai-wah, says investors should focus on stocks harnessing the elemental force of fire, and avoid those vulnerable to it.

Oil, given its combustible nature, will be a gainer. Construction and property firms are also in favor.

“Oil prices will rise at least 5 percent, because the fire will be fierce, and other sectors related to fire will also rise,” said Ma.

Metals such as gold, steel and zinc, top performers this year, could be tempered in 2007.

“The fire will dominate them,” he said, along with sectors related to gold, such as financial and banking stocks.

Wood is good
Fire is the 2007 force for master Lai Hon-fai as well, but he says wood will moderate the destructive effects.

“The wood element will have a secret effect on the fire by adding prosperity. So on the surface things might not be as good as this year, but there’ll still be relatively normal growth.”

He says the U.S. benchmark Dow Jones industrial average could drop by 5 percent, with most volatility likely in May and November.

Years ending with the number seven have a track record of stock market disaster, Lo warns, referring to the 1987 Wall Street crash and the Asian financial crisis that struck a decade later.

“You have to be very careful, the worst could be October ... but it won’t be as bad as 1997,” he said.

On the political front, Lo expects strife in the Western world, but few flashpoints in Asia.

“There will be turbulence, there will be fights, there will be explosions and clashes. It’s also a year of evolution.”

“Asia is comparatively stable, the bad energy is in the North next year, so therefore America and those (Western) countries will more easily have natural disasters and other problems.”

He also believes a “sick” energy might arise.

“Something we have to be careful of is sickness and health problems. Epidemics could come. We have to worry about avian flu, that kind of thing.”

Copyright 2012 Thomson Reuters. Click for restrictions.

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