Asian Surge Will Propel China Mutual Fund

A surge in Asian markets this morning added strength to my claim that the Fidelity China Region Fund (FHKCX - commentary - Trade Now) is the best pick for the third quarter.

FHKCX is a mutual fund that seeks long-term capital growth. The fund invests in the securities of Hong Kong, Taiwanese, Chinese and other investments that are tied to the China region. Positive gains in all of these markets last night will likely propel this fund throughout trading today.

While the U.S. slept, the markets overseas saw some notable gains. The Wall Street Journal reported that Hong Kong led the advance, climbing 3.7% to 19502.37, its highest level since September of 2008. South Korea jumped 2.7%, also reaching its highest point since September. China's Shanghai Index and the Taiwanese markets also stayed strong during trading, increasing 2.4% and 1.3%, respectively.

Mining stocks were the big gainers in this market surge. Both the Aluminum Corp. of China (ACH - commentary - Trade Now) (Chinalco) and Jiangxi Copper (0358.HK) of Hong Kong rose by their Shanghai daily 10% limit. Chinalco surged 7.7% while Jiangxi Copper soared 8.1%.

On the other side of the spectrum, Chinese banking stocks underperformed during trading. This was largely due to words from Liu Mingkang, the head of the Chinese Banking Regulatory Commission. Banks were warned that they need to follow strict criteria when granting loans on second mortgages to maintain loan quality. While some banks fell into the red on this news, others such as China Merchant Bank (3968.HK) stayed relatively unchanged throughout the day.

While every country has been affected to some extent, China and other Asian nations have managed to hold relatively strong throughout this global economic crisis. As these nations continue to show positive gains, I remain confident that FHKCX will benefit investors who choose to hold a small amount in their portfolios.

Be sure to check out my original article on this fund as well as the ETF Market Opportunity Fund (ETFOX - commentary - Trade Now), my choice for best fund for the second quarter. ETFOX is currently up 16.69% for three months.

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Know What You Own: A number of bond-related ETFs might be of interest to readers of this column, including the SPDR Barclays Short-Term Municipal Bond ETF (SHM - commentary - Trade Now), the SPDR Barclays Municipal Bond (TFI - commentary - Trade Now) ETF, the iShares Barclays 20+ Year Treasury Bond (TLT - commentary - Trade Now) ETF, the iShares Barclays 7-10 Year Treasury Bond (IEF - commentary - Trade Now) ETF, the iShares Barclays 1-3 Year Treasury Bond (SHY - commentary - Trade Now) ETF, the iShares Barclays 3-7 Year Treasury Bond (IEI - commentary - Trade Now) ETF and the iShares Barclays 10-20 Year Treasury Bond (TLH - commentary - Trade Now) ETF. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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At the time of publication, Dion was long ETFOX.

Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.