Advice for Investors in China: Consider an 11-Month Vacation
SHANGHAI, China -- During the past two months, China's key stock-market indexes have sustained a remarkable rebound that brokers attribute to high expectations for market reforms, coming initial public offerings and an inflow of foreign investment.
Yet, just as important may be the moon. In recent years, China's stock market has performed best in the early months of the year -- a trend known as the Chinese New Year Effect -- only to slump later on.
The phenomenon may be at work again. The benchmark Shanghai Composite Index climbed 8.1% in January, and has added another 3.1% in February through yesterday's close of 1297.19. The Chinese New Year, also called Lunar New Year, began Jan. 29.
Last year, the Shanghai Composite Index spurted 10% in February, the month in which the Chinese New Year began. But by the end of 2005, the index was off 8%, its fourth-straight annual drop. In 2004, the market surged nearly 17% in the first quarter before ending the year down 5.5%.
The Chinese New Year is the country's most important holiday, and the New Year Effect is often cited anecdotally as affecting overall economic activity, including stock performance. As they do in explaining other calendar-related phenomena that seem to influence various markets, some analysts point to bonuses paid at this time while others call it an anomaly that reflects optimism around a festive season.
When Chinese New Year begins is determined by a lunar calendar, with the holiday sometimes celebrated in late January but more often in February. Tradition calls for exchanging cash gifts and focusing on how to improve one's financial condition -- which in modern times includes swapping stock tips, analysts say.
Now, the Chinese New Year Effect has been documented in an International Monetary Fund working paper written by a husband-and-wife team: Jason D. Mitchell, a World Bank consultant, and Li Lian Ong, an economist at the IMF. Their conclusion: By buying at the beginning of the month during which Chinese New Year begins, usually February, and selling at the end, investors in Shanghai-listed Class A shares would have chalked up a compounded gain of 138% over the 12 years of their study. (The authors tracked the Shanghai Stock Exchange A Share Index between 1991 and 2002.) Held for the whole period of the study, that class of stock would have returned only 29%. Class A shares peaked in June 2001, when the Class A index closed at 2242.42, meaning it closed yesterday down 39% from its high point. Class A shares are denominated in yuan and, until recently, were available only to local investors.
The 46-page IMF working paper argues that cultural reasons help explain the Chinese New Year Effect, and backs its conclusion with a statistics-laden analysis of Chinese stock-trading patterns for the 12 years. The authors say unique characteristics of China's stock markets "provide an opportunity for examining the influence of cultural versus structural factors in stock-pricing behavior."
Other analysts have sought to predict the cultural impact of investing in China. In tongue-in-cheek annual reports over a 12-year cycle of the Chinese calendar, Credit Lyonnais Securities Asia made predictions about how markets might move.
In its final "Feng Shui Index" report, CLSA projected that investors in China will enjoy a relatively sustained run-up in 2006, the Year of the Dog on the Chinese calendar. In CLSA's only previous report for a Year of the Dog, for 1994, it said the Chinese calendar called for "defense and protection" in such a year.
Generally, the calendar is seen as a factor in driving market trends in the U.S., too. For instance, U.S. stocks often do well in January on expectations that pension money will flow into the market then. American investors tend to get spooked in October, the month when the market crashed in 1929 and 1987. Even U.S. football's premier event, the Super Bowl, can make stock traders antsy.
According to the IMF working paper, Chinese New Year appears to have a lasting, positive impact. Shares bought on the Shanghai stock exchange just after the holiday and sold before June for the years 1991 to 2002 would have returned a whopping 472% based on the Class A index, even better than the gains for the one-month strategy, it says.
The paper also points to the performance of China's Class B stocks to support its thesis. It says Class B shares, which are denominated in foreign currency and have always been available to foreigners, appear to have been influenced more by international trends like U.S. stock performance, and haven't done as well around Chinese New Year as Class A stocks.
Other analysts theorize that Chinese markets rise at the start of each year, as investors buy back what they sold at year end. The market traditionally declines in December, perhaps partly due to selling by investors who can't legally trade -- such as government agencies -- and want to hide their activity in year-end bookkeeping, says Peter Alexander, principal of Shanghai investment-fund consultant Z-Ben Advisors.
Key Chinese stock indexes fell in December in seven of the past 10 years, he says.
Recent gains on Chinese markets may have another explanation: that this year could in fact bring real improvements in the market's health. Authorities are pushing to wrap up a program to make all equity tradable, in the boldest restructuring of the ownership of listed companies on the Shanghai and Shenzhen exchanges since they opened more than 15 years ago.
Analysts say regulators also soon could allow companies to resume initial public offerings, a possibility that is boosting the enthusiasm of local and foreign investors.
"People are trying to get money into the market," says Bruce Richardson, strategist at Evolution Securities in Shanghai. "I'm actually quite positive right now."
众口纷说“中国春节效应”
两个月来，中国股市主要指数持续强劲反弹，交易员们普遍将之归功于投资者对市场改革的乐观期许、即将到来的首次公开募股、以及外国资金的流入。
不过，时间恐怕也是重要因素之一。这几年，中国股市一直在年初的几个月表现出色──这一趋势已被冠以“中国春节效应”之名──然后就开始下滑。
这个效应可能又显灵了。1月份上证综合指数飙升8.1%，2月份再接再厉继续攀升3.1%，至周一收于1297.19点。今年的中国农历新年，又称春节，始于1月29日。
去年，上证综合指数2月份飙升10%，也是春节开始的当月。但截至2005年年底，该指数累计下滑8%，连续第四年收低。2004年，该指数第一季度升幅逼近17%，但全年下跌了5.5%。
春节是中国人最重要的节日，春节效应也往往被归结为整体经济活动升温的原因，包括股市回暖。大家都拿著日历对影响各个市场的因素做出一番解释，有些分析师认为是春节期间发的奖金起了作用，有人则说这是一种反常现象，体现了洋溢在节日期间的喜庆气氛。
中国的春节是根据农历历法确定的，有时在1月底，更多时候在2月。春节的习俗包括派发红包，互道“恭喜发财”──分析师说，这在现代也包括了互相探讨股市交易心得。
现在，中国春节效应已经被写进了国际货币基金组织(International Monetary Fund, 简称IMF)的工作报告。由世界银行顾问杰森?米歇尔(Jason D. Mitchell)和IMF经济学家Li Lian Ong共同撰写的这份报告得出结论：1991-2002年这12年间，上海A股市场的投资者如果在春节开始的那个月（往往是2月）月初买进，月底卖出，那么历年来的累积回报就将高达138%。但如果在1991年年初买进，2002年年底卖出，那么累积回报只有区区29%。A股市场在2001年6月升至顶点2242.42点，到本周一收盘已经回落了39%。A股市场用人民币交易，直到最近才对外国投资者开放。
这份长46页的IMF工作报告认为，文化习俗能帮助解释中国春节效应，并用针对12年中国股市走势的统计分析为依据。报告作者称，中国股市的特性“提供了一个考察习俗和结构性因素对股价走势产生影响的机会。”
其他分析师也一直在努力，想准确预测在中国投资会受到的文化方面的影响。中国的生肖12年一轮回，Credit Lyonnais Securities Asia针对这个文化习俗不无调侃地做出了自己的预测。
在最终定型的《风水指数》报告中，CLSA预测，2006年，也就是中国农历的狗年，中国投资者会迎来一个相对持续上扬的年份。在此之前，CLSA唯一对狗年发布预测报告是在1994年，当年的报告说中国的黄历建议这一年“采取守势”。
放之四海来看，时间也被看作是影响美国市场走势的因素。比如说，美国股市往往1月份表现出色，因为投资者普遍预计养老金资金会涌入股市。美国投资者常常在10月份草木皆兵，1929年和1987年的股市崩盘都在这个月份。即使是超级碗(Super Bowl)橄榄球大赛也能让股市交易员坐立不安。
根据IMF的工作报告，中国春节的影响似乎更长久更乐观。仍以上海A股市场为例，如果1991年-2002年期间每逢春节假期一过就买入，当年6月之前沽清，那么累积回报将高达472%，比月初买进月底卖出的策略还高。
报告还以外国投资者获准参与的B股市场走势为证，称这里受国际市场趋势的影响更大，例如美国股市的表现等。B股市场在中国春节期间的表现就不如A股市场。
还有分析师归纳说，中国市场往往在年初走高，因为投资者纷纷买回去年年底抛售的头寸。上海投资基金顾问机构Z-Ben Advisors的分析师彼得?亚历山大(Peter Alexander)就说，中国股市常常在12月下滑，也许要部分归咎于那些违规参与交易的投资者的纷纷抛售，政府机构就是其一，他们怕在年底结账时暴露。
他说，最近10年当中有7年的12月，中国股市主要股指都呈下滑之势。
近来中国股市走高可能还有一个原因：市场基本面今年可能出现实质性的好转。监管机构正在积极推进股权分置改革，改革力度之大是上交所和深交所成立逾15年来之仅见。
分析师们认为，监管机构很快会恢复新股发行，这也可能鼓舞了国内外投资者的人气。
“人们都在尽力向市场投钱，”上海Evolution Securities的策略师布鲁斯?理查森(Bruce Richardson)说，“眼下我真的很乐观。”
