There’s a global stock party going on and I hope we are invited!
The Hang Seng jumped over 400 points to 19,725. We can no longer ignore the FXI, an ETF of 25 major Chinese stocks that I have been avoiding due to the inclusion of ICBC, a bank with a p/e of 32. But you can’t ignore this chart or what is now going on in China so we will start watching this along with our usual global indexes.
I can’t bring myself to buy these stocks at the moment (we do have CHL) but ICBC jumped another 11% this morning, LFC rose 8.2% and Bank of Communications (another holding) gained 6.2%. Despite these amazing performances, the Hang Seng was out gained by mainland China’s market which rose 5.7% this morning to 10,137 - Now that’s a Santa Clause Rally!
"People have to realize hedge fund managers from around the world are looking at China, Japan and India as the big plays for next year," said Chris Tang, a fund manager with Marco Polo Investments. "
China is not immune to growing pains though, the CB is concerned about inflation and the auto industry may be overproducing (as Chinese demand is NOT what people tell you). And please, let’s never forget how this economy is being built – it’s not all fun and games at the Barbie factory!
The rest of Asia was up but a little more modest than China, who is clearly the life of the party (this is why my 2 girls are learning Mandarin!). Toyota, Honda and Mazda all gained about 2%, taking the Nikkei to a 7-month high at 17,223 and all of this went on as an earthquake knocked out a lot communications throughout Asia!
Europe continues it’s slow but very steady march up, not looking much different than our major exchanges with the CAC, DAX and FTSE all just off slightly from their highs – only they are not fretting over it like our traders are!
Over here, we had a very nice day yesterday and hopefully we can return to looking at our upside targets again. I am still calling for 75% cash into the long weekend but, if we survive next week, we have plenty of positions we can add to: