“While the U.S. markets are rising, Asian stock markets are on fire,” says global specialist Nicholas Vardy.
In his The Global Bull Market Alert, he suggests, “Our latest bet is s China play; we are recommending the iShares MSCI Hong Kong Index (NYSE: EWH). Here, he explains why he believes that Hong Kong’s stock market is “set to soar over the coming months.”
“First, although it is thousands of miles away, the Hong Kong stock market is directly subject to the whims of U.S. interest rate policy.
“As you know, the Fed has cut interest rates to essentially zero in the U.S. What you may not know is that Hong Kong’s monetary policy is closely tied to the U.S. dollar.
“For the last 25 years, the Hong Kong dollar has been worth about $7.80, a level ensured through an interest rate policy implemented by a currency board.
“As a result, Hong Kong’s stock market is subject to wild “booms and busts” for reasons that have nothing to do with its own economic prospects.
“Every time the Fed cuts real interest rates to zero — as it did in 1992-1993, and again in 2003-2005, the Hong Kong stock market has at least doubled.
Full Story: http://www.bloggingstocks.com/2009/05/11/hong-kong-etf-ewh-set-to-soar/