Buyer beware this Chinese New Year

7 min Read Published: 10 Feb 2015

Playing the Chinese New Year is a popular story with the money sections of the national newspapers. The stories normally centre around the idea that the Chinese New Year is upon us, so should you be buying Chinese equities? This year the Chinese New Year celebrations start on 19th February 2015.

Where is the evidence?

Yet apart from a sense of euphoria, where is the evidence that buying Chinese equities around the Chinese New Year is profitable? Is it just an assumption drawn from the Santa rally / January effect traders look for in US and UK equity markets?

Let us take the last 5 years for example, below I've mapped how well you would have done in local currency terms if you'd bought Chinese equities (as measured by the MSCI China Index) at the start of the Chinese New Year in each case. Obviously the date of the Chinese New Year varies from year to year which is why each chart starts at a difference date.

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