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Local stocks welcomed the Year of the Dragon with their second most auspicious Lunar New Year debut performance in 12 years.
Resuming trade after a five-day holiday, the Hang Seng Index rose 1.63 per cent to 20,439.14 points - its highest closing since September. 
That was the second-best Lunar New Year debut in more than a decade, beaten only by a bullish 4.48 per cent rise on the first trading day in the Year of the Ox in 2009. 
Yesterday's 1.63 per cent gain also matched exactly the increase on the first trading day of the last dragon year, in 2000.
But yesterday's gains on the local blue-chip index had less to do with fung shui than the Fed. 
Shares were reacting to the US Federal Open Market Committee's decision to prolong its target for keeping interest rates ultra-low until late 2014. The Fed said last year it would target low interest rates - currently 0 to 0.25 per cent - until 2013. 
'To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the committee expects to maintain a highly accommodative stance for monetary policy,' the central bank committee, headed by Fed chairman Ben Bernanke, said  following a two-day meeting. 
'Economic conditions - including low rates of resource utilisation and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014,' it said.
Analysts said the prolonged environment of low rates coupled with speculation the Fed may launch a new round of quantitative easing - or injecting new money into the economy - would be a big positive for stock markets. 
'Mr Bernanke is presenting the world with a gift,' Khiem Do,  Hong Kong-based head of multi-asset strategy at Baring Asset Management,  told Bloomberg.
'He wants to underwrite the recovery, and underwriting the recovery is very good for equity markets and risk assets.'
Indicators suggest the local market is continuing to shake off the jitters it experienced as recently as October, when the Hang Seng plunged as low as 16,250 points. 
Shares are up 10.88 per cent in the calendar year to date, while trading volumes are rebounding from their holiday season lull. 
Yesterday's main board turnover of HK$60.84 billion was well above the 30-day average of HK$48.9 billion, and edging towards the six-month average turnover of HK$64.2 billion.
At the same time, volatility continues to recede. The Hang Seng Volatility Index, compiled by Standard & Poor's to measure near-term market swings as implied by futures contracts, ended yesterday at 22.56 points. That is down significantly from the 30-40 point range it hovered in for much of the second half of last year. 
Chinese Gold and Silver Exchange Society president Haywood Cheung Tak-hay said the outlook for precious metals was glistening. 
'The price of gold will continue to be bullish, fluctuating in the first two quarters of the year, but after that it has a chance to top US$2,000.'
He said the exchange society planned to launch yuan-denominated silver trading as early as the second half of this year, after it launched gold trading in yuan in October. 
Cheung said mainland customers account for about 20-30 per cent of the yuan-denominated gold business, with average daily trading volume of between 1.5 billion yuan and  2 billion yuan (HK$1.84 billion to HK$2.46 billion).



Local stocks reopen with dragon's roar