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Maybank favours healthcare, education, logistics and agriculture in Year of Water Tiger

Lim Hui Jie
Lim Hui Jie12/23/2021 07:00 AM GMT+08  • 6 min read
Maybank favours healthcare, education, logistics and agriculture in Year of Water Tiger
How will the Year of the Water Tiger turn out? Find out in this Maybank report with fengshui master Kevin Chan.
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Investors consider many factors when they invest. Some look at fundamentals, some look at valuations, and others look to higher powers.

Many businesses in Singapore do take fengshui into account. According to Maybank Kim Eng’s 2022 fengshui guide done in partnership with fengshui master Kevin Chan, the coming year will be a relatively stable one for Singapore, as the country emerges from a pandemic that has taken the markets for a roller- coaster ride.

Maybank says that Singapore’s economy is set to grow at 3.8% in 2022, following a strong 7.1% rebound in 2021. “We expect a broader construction and services recovery, following most of the heavy lifting done by the manufacturing sector in 2021,” it says.

With its high vaccination rate and currently manageable intensive-care unit capacity, Maybank expects Singapore to press ahead with reopening its borders and economy. The Republic is also expected to have an advantage over regional peers, which are still in the ramp-up phase of vaccine deployments.

As such, reopening could support growth and earnings upgrade opportunities for domestic demand and Covid-19 frontline sectors in 2022.

The brokerage also sees that the acceleration of structural shifts, aided by Covid-19, increased digitalisation, integration of green business strategies and supportive government initiatives, could support the rising pace of M&As, restructurings and privatisations into 2022. Sectors that could be impacted the most include government-linked companies, high growth small and mid caps, REITs and late-stage start-ups.

See also: Phillip Securities keeps an eye on 'disinflation' and China reopening exposure in picking its 10 stocks

Now, on the fengshui front, 2022 will be the Year of the Water Tiger. Chan says that in the upcoming Lunar Year of the Water Tiger, wood, water and metal are the elements with strongest energies. “Wood will stand tall like a majestic maple tree nourished by gushing water energy throughout the year,” he says. According to Chan, Singapore, as a “wood country”, will enjoy “stability, but also relentless activity”.

What this means for the investor is that focusing on the right sectors can be very profitable, Chan says. He does caution that with a rise in activity comes increasing competition, and warns of operating margins that could constrict towards the latter part of the year.

To him, sectors in healthcare, education, logistics and agriculture are set to be vibrant and competitive.

See also: Investors risk making a classic portfolio mistake

In the Year of the Water Tiger, sectors under the wood element have the strongest energy signature, with sector winners like education, agriculture, trading, as well as new economy start-ups. These sectors will help associated sectors to be vibrant, and competitively strong companies in the financial sector will also benefit as it supports wood sectors.

Complementing the wood elements are the sectors under the water element, which include shipping and logistics, hospitality, conglomerates, and marketing and advertising. These sectors will “provide nourishment and support to wood sectors”, and are seen as his “sector winners”.

Chan says that the water element is the second most powerful energy signature in 2022, with “many value investing opportunities here”. He does say that timing will be important, with the second half of the year offering the best entry points.

In contrast to the largely optimistic forecast for the wood and water element sectors, there are more mixed fortunes for sectors under the metal sector, with the sector winners being banks and financial institutions, healthcare, defence and entertainment.

The reason is the weak yin energy of the metal sector will restrain the destructive forces of this sector, which means that sectors like pharmaceuticals could see pressure from the influx of new treatments and medicines. However, Chan adds, “sectors in the business of managing the forces of risk will find favour… [and] Fortune beckons investors willing to take the plunge and hold for the long term”, he writes.

On a more pessimistic note, sectors under the fire and earth elements will be weaker in 2022, due to the strong water and wood elements.

Sectors under the fire element are fierce, but it can be dampened by the strong water element. As such, any profits here will be temporary and more dependent on an individual’s luck, he thinks.

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“Just as firewood left out in the rain will take a long time to ignite, associated sectors have a long road to recovery. Investors should be ready to grow and sell, especially at any signs of weakening management or business operations,” Chan adds.

Sector winners under the fire element are aviation, F&B, tourism and technology. Chan thinks that technology could enjoy strong growth for a while, but this will be unsustainable due to major leadership and business mix changes.

Finally, earth-related sectors will find it hard to get support as wood energy overwhelms and increases chances of regulatory interventions.

“Excess wood this year will constrict the earth, and the rays of the sun will find it tough to penetrate and touch the ground,” says Chan. With a weak fire element, the earth element will have little support in clearing out excess wood, and as such, buyers into this sector will find more favour than sellers.

All is not lost, however. Some sector winners are the real estate and construction sectors, human resource and recruitment, as well as the fashion and clothing industries, although there are “few gems among the stones, little left and only bones”, Chan writes.

In summary, the top three sectors seen to do well are healthcare, education and shipping & logistics, while the top three to avoid are aviation, property and technology.

Technology stocks have won over countless fans over the past few years, but Chan warns that there may be a “reckoning” as the sector is governed by fire energy. “There may be changes in leadership or upheavals in the business models that might leave a scorched earth,” he says.

But for some investors, especially those who have overseas stocks in their portfolio, they may want to be more mindful of the larger geopolitical view, such as how the relations between the US and China will play out and affect their holdings.

Chan says that the US, as a metal country, may see some consolidation, which means US equities will still offer profits, but at higher risks. He thinks profitability will start to pull back, but as the US is also a superpower, it can impose its will globally.

As such, this will benefit the US from the profit side rather than the risk side of metal energy, which is positive for US stocks during the year. On the other hand, China may also see some weakness in its position. However, conflict, specifically military conflict, is unlikely.

Chan explains that military conflict is a metal and fire activity, so this is unlikely in a wood year. For both countries, there is some erosion of power from decentralisation (such as crypto), which will further weaken the capacity for prolonged conflict.

As for the ever-present Covid-19 pandemic, not only are the humans on this earth not seeing an end as yet, but even the higher powers that be do not see an end in 2022, with Chan saying “celestial signs do not show an ending [to the pandemic]. It may be better controlled, but will still be present and will cause disruption”

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