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It’s the Year of the Golden Rabbit, which has some predicting “hoppy” things for iShares‘ Hong Kong ETF.

Hong Kong has seen a number of economic improvements in recent months:

  • Total retail sales in Hong Kong surged 18.3% in value or 15.5% in volume for 2010 year-over-year as the economy experienced a rebound in tourism and local consumer sentiment, reports Alex He for The International Business Times.
  • The restaurant sector saw revenues increase 5.7% in the fourth quarter year-over-year, and total purchases by restaurants jumped 9.5%, writes He. All-in-all, total restaurant receipts increased 3.2% 5.1% in value or 3.4% in volume for 2010 year-over-year.
  • The Hong Kong Air Cargo Terminals Ltd., which handles 80% of total air cargo that passes through Hong Kong International Airport, stated that it processed 230,0777 metric tons of air cargo in January, or up 8.2% year-over-year, as a recovering global economy bolsters air cargo traffic, reports Joanne Chiu for Automated Trader.

But the country could be in for a volatile year, according to an interpretation of an ancient form of Chinese aesthetics.

Hong Kong brokerage CLSA based its annual market forecast on the traditional Chinese beliefs of feng shui, which warns that the year of the rabbit will be “hoppy” – in other words, volatile – for Hong Kong markets, comments Louisa Lim for NPR. The brokerage believes financials, raw materials, gaming and transportation sectors will do well for the year.

Good thing, then, that iShares MSCI Hong Kong Index Fund (NYSEARCA:EWH) has a 63% weighting in the financial sector. Consumer discretionary, utilities and industrials account for 11% each.

How much stock can you put in the forecast? Well, CLSA’s feng shui prognostication was on the spot nine out of the 12 months last year. But we all know past performance doesn’t indicate future results! That’s why a trend following strategy might be a better guide.

Max Chen contributed to this article.

Disclosure: None

Source: Hong Kong ETF: 'Hoppy' New Year?