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Friday, February 13, 2015, 10:50

Stomping good times

By KRISTINE YANG and ALFRED ROMANN in Hong Kong

Famines, wars and stock crashes aside, the Year of the Goat has also produced stellar market gains.

Stomping good times

Stock information is displayed at a trading hall of a securities firm in Shanghai. The A-share market for foreigners was launched in Shanghai in the year of the goat in 2003. (Photo / AFP)

The Year of the Goat, the eighth in the cycle of lunar new years, is around the corner. The goat has a reputation as a thoughtful and gentle character but it has not always lived up to this characterization.

Past years of the goat have brought with them some remarkable events, many of which have had little do with thoughtfulness or gentleness.

From famines and crashes in 1931 to the launch of the A-share market on the Chinese mainland in 2003, past goat years have led to changes in the course of history and deeply impacted markets for both good and bad. And yet, for one reason or another, such as the end of war or oil booms, the goat has generally been good for markets and economies.

2003

This was an important year for the Shanghai Stock Exchange (SSE), which launched the A-share market for foreign investors. Turnover on the exchange rose 71 percent over the previous year, and 88.3 trillion yuan ($14 trillion at current exchange rates) worth of shares changed hands.

By the end of the year, the SSE 180 Index rose 12 percent and the Shanghai Composite 11 percent. The market in Shenzhen did not do as well, dropping almost 3 percent.

The year saw the beginning of serious e-commerce in China when Alibaba launched its e-commerce platform Taobao.

On the other hand, the goat also brought with it the end of a technology bubble that had seen Internet stocks soar in Western markets.

An outbreak of severe acute respiratory syndrome (SARS) started in Hong Kong and spread through Asia and much of the world. The MSCI Pacific ex Japan Index, which tracks stock markets through the region, fell 13 percent from January to March but came back in a big way and recorded gains of 42.5 percent for the year.

Hong Kong’s economy also recovered quickly from SARS, thanks in part to the “individual visit” program for tourists from the mainland. The Hang Seng Index grew 35 percent through the year, while the Hang Seng’s China-affiliated Corporations Index rose 152 percent through the year.

After three years of decline, Japan’s Nikkei Index turned a corner and brought in an increase of 17 percent.

Between 2000 and 2003, the stock market in the United Kingdom dropped 52 percent. But in 2003, the goat ushered in the beginnings of a recovery with the FTSE 100 Index rising 12 percent after three successive years of declines, including a 23 percent drop in 2002. The CAC 40 Index in France rose 27 percent.

The United States led an invasion of Iraq after having fought a war with the country in the previous year of the goat. The end of this second Iraq War led to a stock market rally in the US. The Standard & Poor’s (S&P) 500 Index rose 26 percent and the Dow Jones Industrial Average (DJIA) 25 percent.

1991

This year of the goat — from Feb 15, 1991 to Feb 3, 1992 — was pivotal as it was widely seen as the beginning of the third industrial revolution and the beginning of the Information Era.

It was in this goat year that the World Wide Web first entered the public consciousness. Not only did the Web lead to a revolution in people’s lives, it also generated some serious gains in markets. Through 1991, the Nasdaq rose 65 percent.

The First Gulf War ended in the spring of this year. Iraq had invaded Kuwait in August 1990 and an international force led by the US fought from January 1991. The year also saw a number of countries separating from the Soviet Union and eventually ending the Cold War.

The S&P 500 Index rose 26 percent through the whole year while the DJIA increased 20 percent. US government bonds also had a banner year. In the UK, the FTSE Index rose 24 percent while the CAC 40 Index in France grew 30 percent.

The year ushered with it the end of a recession in the US that had started in 1990, although much of the credit went to Paul Volcker, who was appointed chair of the Federal Reserve and implemented a strategy of limiting the money supply and boosting short-term interest rates.

1979

This goat year was marked by the Islamic Revolution in Iran that ended a pro-Western regime and replaced it with the Islamic republic of today. That was a turning point for the oil market. Iran has the third-largest oil reserves in the world.

In the same year the average daily volume of trade on the New York stock exchange reached 32 million shares. The S&P 500 Index rose 12 percent and DJIA 4 percent during the year.

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