Written by VASS

With the Lunar New Year holiday coming to a close investors have begun to come back to the market. While trading is light the Hang Seng Index has gained 2% up 450 pts. This move higher is partially because of the positive close in the U.S. stock markets, and Venezuala President Chavez’s threat to stop supplying America with oil.

So far gains have been across the board and moderate. Financials, oil and mining, and transportation have all shifted higher. Investors remain cautious but optimistic ahead of U.S. economic indicators due to be released later in the week.

Some of the companies leading to the upside include China Eastern Airlines, the target of merger hopes for some time now.

“The continuing interest of Temasek and Singapore Airlines in China Eastern is certainly a boost to China Eastern’s share price,” said Patrick Yiu, associate director at CASH Asset Management.

Add to this fray the fact that Air China’s parent and Cathay Pacific are also showing their desire to share a part of China Eastern and the potential bidding war is a major attraction.

Air China was up 0.14 hkd or 1.95%, Cathay Pacific was up 0.32 hkd or 1.88%, and China Eastern Airlines was up 0.08 hkd or 1.53%.

PetroChina gained 0.54 hkd or 5.08% which was likely linked to Venezuelan president Hugo Chavez comments. It was President Chavez that privatized Petroleos de Venezuela, which led Exxon to go after its losses in British and international courts. So far $12 Billion in assets of Venezuela have been frozen so far. In anticipation of increased demand oil spiked $3 and PetroChina advanced.

So far the markets are quiet but given the return from the Holiday, positive economic news, and a bidding war the Year of the Rat should be quite interesting.