Continuing theme for bullishness on Hong Kong

I mentioned iShares Hong Kong last week as an interesting play with a new catalyst - the opening of that market to the speculative middle class Chinese who are making the 1999 NASDAQ crowd look tame by comparison.

From CBSMarketwatch this morning:

• HONG KONG (MarketWatch) -- Hong Kong shares rose to a record high Monday, leading the latest rally in Asia, on hopes that strong fund inflows from China will boost valuations of mainland-related issues such as China Mobile and Jiangxi Copper
• The 41-issue Hang Seng China Enterprises Index soared 6.2% to 13,989.87.
• Andrew Clarke, a sales trader at SG Securities in Hong Kong, said the gains were helped by unconfirmed speculation that "the mainland is going to let up to $240 billion to be invested into Hong Kong" by Chinese retail investors.
• Earlier this month, mainland authorities allowed individual Chinese investors to directly invest in Hong Kong stocks on a pilot basis, raising hopes that a rush of inflows from China would serve to lift valuations.

More information on ACH here from CBSMarketwatch:

• HONG KONG (MarketWatch) -- Hong Kong-listed shares of Aluminum Corp. of China and Jiangxi Copper Corp. soared to records Monday, bolstered by strong fundamentals for the copper market and expectations that the shares could be a favored selection when investors in China gain direct trading access to the Hong Kong Stock Exchange starting later this week.
• The combined gains by Chalco and Jiangxi Copper accounted for nearly 20% of the Hang Seng China Enterprises 811.78-point surge to a record close of 13,989.87
• "This is a play on the discount between A-shares and H-shares," said Francis Lun, general manager of Fulbright Securities in Hong Kong. "Chinese investors will be able to buy H-shares directly from Wednesday, and this rally is in expectation of that."
• Companies listed in Shanghai and denominated in yuan, the Chinese currency, trade at a forward price/earnings multiple in a range of 62 to 70, while similar shares listed in Hong Kong trade at about 19 to 20 times, according to estimates by Phillip Securities in Hong Kong.

Looks like Francis Lun's comments above reinforce my thought that there is a A to H discount play going on with ACH. Amazing, breathtaking move.

Since there seems to be no ETF for the Hang Sang China Enterprises Index, I will continue my buying of iShares Hong Kong ETF (EWH) - I was hoping for more of a pullback but there appears, at this point not to be one.

Long EWH in fund; no personal positions