We think there is a 50% chance or higher for a long missing Chinese New Year rally. In 2014, the only concern is inflation that the effect will fill the street probably start 2nd Quarter. As stocks are also a key inflation beneficiary if interest remain unchanged. A rare scenario where interest rate still low but supply chain cost increase due to government policies. Corporation will transfer all or part of the cost to consumer.
Modern necessities will benefit in this round of inflation. E.g. Food related company where cost can be transferred to consumer. Non necessities like Gold, fashions or travel may got some hit. E.g. Poh Kong, Reliance, Cheetah, Padini will find uphill challenge to increase revenue and maintain profit margin.
However, we recommend a sell if prices over certain PE. But will be a good chance to take certain Chinese owner related stocks.
The strategy is buy in 1st and 2nd week. Sell if with a profit 1 week before new year. Alternatively without unforeseen circumstances, we should have a gain day after Chinese New Year as well.