Year of the Dog’s Strong Start Bodes Well for Chinese Stocks

Chinese stocks rang in the Year of the Dog with a bang, as the Shanghai Shenzhen CSI 300 Index rose the most since August 2016 on the first day of trading after the week-long new year holiday.

Since the benchmark index’s inception in 2005, every Chinese New Year that started with gains on the first day ended higher on the year. Also, Chinese astrology suggests that this year should be a good one financially, as the word for a dog’s bark sounds like the word for prosperity in Chinese.

The best first days ever came in 2006 with gains of 2.3 percent and in 2018 with gains of 2.2 percent. Both were the Year of the Dog. In 2006, on a lunar year basis, the CSI 300 Index surged 18 percent in the first three months and 124 percent after 12 months, the start of the last big bull market in China.

When the first day of trading finished lower, the annual returns in the index slumped five out of eight years. The worst first day came in 2008, when the index fell 2.2 percent on expectations for possible tightening of regulatory policy to start the Year of the Rat, which ended down 58 percent.

Source: Bloomberg