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The Hang Seng China Enterprises Index rose another 1.75% overnight, with financials in the lead once again. Major banks were up by 3%-5% on the day. Year to date, Citic Bank is up 25%, Agricultural Bank of China is up 22%, Postal Savings Banks is up 18%, China Construction Bank is up 17%, Merchants Bank is up 16%, Bank of China is up 15%, and Industrial and Commercial Bank of China is up 14%.

Forward-looking price earnings ratios for the big four Chinese banks are in the 6%-7% range, about half the level of American banks. Market fears of a corporate debt bubble always were exaggerated, Asia Unhedged has always believed, and what used to be our contrarian view now has become the consensus.

Bottom line: Stay long Chinese bank H-shares.