As Asia kicks off a new lunar year on Monday, we used Kensho to look for the best Chinese New Year trades over the past decade.
US stocks have typically moved higher during the five-day-long holiday, when Chinese markets are closed. Volatility tends to fall, and the Nasdaq—currently in correction territory—tends to outperform.
Gifting gold coins and jewelry are a staple of the lunar new year holiday, symbolizing wealth and good fortune. As demand rises, investors have pushed the price of the precious metal higher too.
But silver has been the stand-out performer. Over the last 10 years, it has traded positive every week during the holiday, except for once in 2013. On average, it has returned 2.6 percent — nearly 9-fold the S&P 500’s average return in the same period.
With the Chinese markets—and many businesses—closed for the entire week, Chinese companies listed in the United States don’t have a lot of direction. So ADRs tend to fall during the holiday, underperforming the broader markets.
One exception is Chinese search giant Baidu. Shares have traded positive 70 percent of the time since 2006 during the lunar new year week, and returned more than 3 percent on average.
Instead, look to select U.S. companies with significant sales in China. As the Chinese dine out for the holidays and buy gifts for loved ones, stocks like Yum Brands, Starbucks and Tiffany & Co have reliably outperformed.
It’s been a rough start to the calendar year—but these historical trades may be an opportunity to kick off your lunar new year on the right footing.