HOLD YOUR HORSES: Snake Year Not Guaranteed Bull

Main reference: Story in Sinafinance

THE YEAR of the Dragon is breathing its last flames and the Year of the Snake will soon slither in.

But don’t get caught up in the recent hype and believe 2013 will come up all roses.

A bit of recent history:

Commodity prices are a boon to property developers. But can the bonanza continue into 2013?  Photo: CR Land

The benchmark Shanghai Composite Index – the chief tracker of A and B shares listed in Shanghai and Shenzhen – has fallen in the past two calendar years.

But thanks to a resurgent December 2012, it looks like the cycle of calendar-year losses may be about to end.

However, that is meager consolation for the millions of shareholders who have lost money this year.

Commodities prices have been all over the map of late.

For downstream processors of petroleum, the falling crude prices these past few months have been a blessing, unless they were locked into long-term supply contracts at pre-fall prices.

Metal processors and consumers are also riding of late on slumping selling prices for iron ore, copper, zinc and aluminum.

But with China’s economy trending upwards, steelmakers, automobile producers, property developers and other major consumers of raw and processed commodities are likely to see a bit of sticker shock once suppliers are confident enough to raise prices again.

Will the sluggish Dragon Year become a bullish Snake Year?

Furthermore, December’s thaw in share prices – i.e. the nearly 15% rise in the benchmark Shanghai Composite Index – has lighted a fire under investor sentiment and that has inevitably caused a good deal of due diligence and risk-averse share buying behavior to be throw to the four winds.

And let us not forget that the largest country market for Chinese exporters – the US – is not necessarily out of the fiscal woods, and the cliff is potentially just days away from being reached.

Therefore, it is hard to imagine December’s run having the stamina to carry into January with much momentum.

But that’s the arcane beauty of the future... one never knows until they get there.

See also:

CITY SLICKERS: Biggest China Urbanization Winners?

‘Chinese New Year Effect’ Arriving Early?

CITIC Says 'Blue Chips Key To China Shares In 2013'

CHINA/HK Property: What Do Big Research Houses Say?