By Grace Li
HONG KONG, Jan 28 (Reuters) - The coming Chinese Year of the Horse may bring conflicts and disasters related to fire but strong gains in stocks linked to wood, the year's two dominant elements, say Hong Kong's practitioners of the ancient art of feng shui.
Believers in the Chinese form of geomancy see the universe as made up of five elements - earth, water, fire, wood and metal - that define the mood and direction of the world. The Chinese zodiac has 12 animals that interact with the elements.
The Year of the Horse, the lunar new year that starts on Jan. 31, contains a great deal of fire, bringing energy, and also wood, fuelling the flames, and making them stronger.
"The upcoming Horse year is also a 'yang wood' year, when people will stick more to their principles and stand firm," said Raymond Lo, a practitioner for more than 20 years who has students all over the world.
"So it is hard to negotiate or compromise as there are more tendencies for people to fight for their ideals."
The combination of a Horse year and a "yang wood" year, which comes round every 60 years, has a record of regional warfare.
The last such year was 1954, which witnessed the Battle of Dien Bien Phu that ended with the defeat of France by the Vietnamese. The previous such year was 1894, which marked the start of the first Sino-Japanese war.
Alion Yeo, another Hong Kong feng shui practitioner, predicted extra turbulence in February, May and August.
"The biggest concern is the disagreement between China and Japan over the Diaoyu Islands," said Yeo about the disputed islands in the East China Sea known as the Senkaku in Japan.
TOO MUCH FIRE
But the good news is that the fire element will drive market sentiment, implying strong performance by stocks.
While the feng shui experts said they expected gains to be limited, brokerage CLSA was bullish in its light-hearted annual outlook based on feng shui, saying Hong Kong's Hang Seng Index should rise to 28,105 points in the Horse Year.
The Chinese territory's benchmark stock index closed at 21,960 on Tuesday.
"Wood-related sectors will flourish, including culture, education, agriculture, lumber and media," said another feng shui practitioner, Lai Hon-fai.
"Property won't do well as it is associated with earth, which is conquered by wood, so Hong Kong's housing prices will be adjusted downward slowly this year."
Too much fire portends disasters such as volcanic eruptions, explosions and power outages during summer, warned Yeo.
The risk of a new wave of bird flu persists, Lo said, and officials in China should be on their guard because the coming year will be full of sex scandals.
But it will be a tough year for people born under the sign of the Horse, Lo said.
Leaders born in the Horse year of 1954 include German Chancellor Angela Merkel, French President Francois Hollande and Japanese Prime Minister Shinzo Abe. British Prime Minister David Cameron is a younger Horse, born in 1966.
Hong Kong leader Leung Chun-ying is also a Horse.
On the other hand, Lai said the year would be favourable for women and the places they govern.
"For Brazil, the World Cup will definitely spur its economy," Lai said. (Editing by John O'Callaghan and Clarence Fernandez)