What the Year of the Dragon means for businesses, according to Maybank’s fengshui report

Millions of Chinese around the world are celebrating the Lunar New Year, ringing in the Year of the Dragon which is often seen as auspicious and prosperous in the Chinese Zodiac.

A new year also brings different fortunes, some Chinese believe, with many turning to consult “fengshui” masters to determine what is to come.

Fengshui, which is literally translated as “wind-water” in Mandarin, is an ancient Chinese practice which seeks to maintain a balance between humans and their environment. The five key elements — wood, fire, earth, metal, and water — are believed to be fundamental in bringing about harmony and some are turning to the ancient art to predict the future of economic activity.

In Maybank Investment’s fengshui report for 2024, its head of research Thilan Wickramasinghe, along with fengshui master Ken Koh, take a look at which sectors will outperform and which will face headwinds in the Year of the Dragon.

2024 is the year of the wood dragon and will be “unique,” according to the report. It will be characterized by all “yang” energies, which are symbolic of masculine, rash, and far-reaching decisions.

The new year also signifies the start of a new 20-year fengshui cycle, in which the fire element will be dominant. This will favor industries that fall under the fire element, such as technology, artificial intelligence, energy, and medicine.

Fire, according to Koh, is a symbol of economic activity, confidence and optimism.

While the global economy is likely to be moderate in the first half of the year, businesses in fire element sectors such as technology, medicine, entertainment and travel will likely do well from the start of the year. Maybank does also point out the insurance sector will be a “star performer” this year.

“However, from June 2024, interest will put the shine back into business sentiments. As a result, the stock market and equities will see a wave of hope and confidence, leading to mergers, acquisitions and initial public offers.”

However, they warn that for industries under the fire element, the first year into a new period of energies “always means changes and painful transitions.” As such, new players are expected to enter, while others will fall out of the fire element businesses during the year.

Sectors under the earth element will also benefit from the dominant fire element, Maybank said, identifying sector winners as waste management, real estate, data warehousing and urban farming.

“Despite rising interest rates and inflationary costs, the dominant Earth industries have shown resilience and continue to break new grounds,” the Maybank report said.

According to Maybank, with the promise of easing interest rates, lower inflation and good fiscal management in 2024, the support for earth industries, especially property, will continue to rise.

The rise of fire energies in the next 20 years will also provide support for earth industries to evolve into sustainable businesses, the report said, and these businesses will contribute to society via the use of technology and artificial intelligence.

Most notably, in industries under the metal element — such as banking, engineering, mining and automotive —  the wood element will be prominent and will bring prosperity to the metal industries.

“Those who are well informed and courageous will be favored by fortune. The wealth potential will be revealed in July and will peak in November 2024,” the report stated.

Maybank said this year presents a great investment opportunity for those who are ready to pick up fair values in the metal industries, adding that the first half of the year provides the best opportunities. However, investments can take up to five years to be fully realized.

While sectors in the earth, metal and fire elements flourish, some industries under the water and wood elements could face challenges in the Year of the Dragon.

2024 may bring challenges for businesses under the water element, but they could still remain profitable as they have the ability to adapt to different conditions, the Maybank report said.

Notably, the report pointed out that the shipping sector will face some difficulties due to problematic shipping lanes.

Other businesses under the water element — such as airlines, cruise operators, accommodation providers, and theme parks — will also face challenges due to changing consumer demands, but are still expected to thrive throughout the year.

Separately, businesses such as marine fisheries and aquaculture farming will see an increase in productivity and production to meet worldwide demand, which will add to their bottom line.

Finally, wood element industries are expected to struggle in 2024, due to the strong influence of the fire, earth and metal elements. But some bright spots still exist — and some of the sector winners include education, fund management, and family offices.

In contrast with the positive forecast for the other industries, “wood industries will face difficulties in the second half of the year, and those who are looking for prospects must have the necessary resources to reach their goals,” according to the report.

“This will result in a lot of work, competition, and resource drain,” the report added. As such, businesses in the wood industry should focus on things like sharing experiences, knowledge transparency, and delivering quick results.