Dear Fellow Investor,

It's been a wild ride for the markets over the last few weeks, but it appears as though the worst is over. In addition to entering a more stable period for the markets, we've been handed a few gifts from some unlikely sources. I'd like to tell you about two gifts in particular and how we will benefit.

Gift #1 came for us when the Fed reduced the rate at which it makes direct loans to banks by 0.5 percentage point to 5.75%. This is the first time it has cut borrowing costs between scheduled meetings since 2001. In the statement, the committee said it is "prepared to act as needed to mitigate the adverse effects on the economy arising from disruptions in financial markets." This is a big deal for the markets and as we've seen, it has given investors a reason to push stocks higher. The Fed is signaling that they are willing to step in to do whatever it takes, and we will take advantage of it by investing in those companies that have the most to benefit from this improved market climate. To get access to my entire China Strategy Buy List, join now.

Gift # 2 came as a surprise to me and will shock investors who are in key Chinese ADRs.  Changes to the current investment policy in China have the potential to flood the Hong Kong exchange with fresh money that will lift specific stocks significantly higher. Here's what happened:

Policymakers Open the Floodgates

On Monday, China's currency regulator said that it will let individual Mainland investors buy Hong Kong stocks directly for the first time. Chinese citizens with a Bank of China account in the northern city of Tianjin will be allowed to invest foreign currencies under a pilot program. They won't be subject to a rule that limits foreign-exchange purchases to $50,000 annually. This policy is huge because, for the first time, China's 17 trillion yuan ($2.2 trillion) in household savings will be able to buy Hong Kong listed stocks. It is a smart move for the government who is scrambling to cool the red-hot A-share market by providing alternative investment options.

China is swimming in money right now, and it is letting more capital flow offshore to curb growth in its record $1.33 trillion foreign-exchange reserves. The huge influx of funds into China from trade surplus and direct investments have flooded the economy with cash and put pressure on the Yuan to appreciate. China doesn't want that to happen so the country has already allowed selected banks and brokerages to start investing overseas starting last year under a qualified domestic institutional investor program, or QDII.

As a result, of the new policy the Hang Seng Index surged 5.9% on the news—the biggest gain in almost nine years. The Hang Seng China Enterprises Index of mainland companies, known as H-share Index, soared 8.7%, the biggest one-day gain in more than seven years.

The impact of this new policy will be substantial, providing an upward revaluation of Hong Kong-listed China shares. Chinese investors could potentially buy hundreds of billion dollars in Hong Kong stocks during the coming years, by taking advantage of cheaper valuations on offer for Chinese shares listed in Hong Kong.

I expect most Chinese investors will scramble to buy well-known Chinese companies listed in Hong Kong, many of which are already a part of my China Strategy portfolio. For example, we own the electricity provider with monopolistic power in China, the aluminum company supplying China's massive growth, the telecommunications leader and the oil and gas supplier. Our New York Stock Exchange listed ADR in these companies are directly backed by shares in Hong Kong, so if Mainland Chinese investors buy these shares, our ADR will go up.

You don't want to miss out on this incredible opportunity the Chinese government is handing in-the-know investors today. Get the names of these companies and more in my just released edition of China Strategy.