David Fuller's view It has been a long time in coming and the evidence is still provisional at this stage as you can see from these charts of the Shanghai A-Shares Index (monthly, weekly & daily). Technically, this Index still needs to break its progression of lower rally highs with a sustained move above 2600, and the key day reversal on 14th March which checked this year's earlier rally. Additionally, a move above 2600 would also break the downtrend mean approximated by the 200-day MA and confirm a higher low which is the hallmark of an emerging uptrend. Devotees of factual chart reading will note the dominance of upward dynamics (large blue candles) in January and throughout the rally commencing in April.

Fullermoney has been looking for this recovery, as subscribers know, based on the oversold condition relative to the MA at yearend 2011, much improved valuations and this year's gradual lowering of commercial bank reserve requirements by the Bank of China. Therefore this update will focus on markets likely to benefit from China's leash effect as its stock market moves from relative underperformance to outperformance.

First, I am assuming that China's stock market will be a lead indicator for its economy which should have largely completed the soft landing forecast by Fullermoney. Recovery would necessitate a firm performance by China's banking sector. Currently, many of the bigger state controlled banks are moving approximately in line with the Shanghai Index. However, one which is smaller than the big four is clearly outperforming - China Minsheng Banking-A (weekly & daily) which has an estimated and historic PER of under 6 and yields 4.41%. For those who can deal in mainland Chinese shares, this is the bank that I would prefer. It has also been listed in Hong Kong since December 2009 (weekly & daily).

China's leash effect would obviously lend support to the Hong Kong Hang Seng Index (weekly & daily) and the Hang Seng China Enterprises (H-Shares) Index (weekly & daily). The former is leading and the current range looks like a first step above the base formation. Breaks above range highs in February by these two indices would reaffirm recovery. This may take several more weeks and clearly the recent range lows need to hold if the next upside move is not to be further delayed.

A recovering China would be bullish regionally, not least for leading ASEAN markets such as Indonesia, Malaysia, the Philippines and Thailand among commodity producing and increasingly industrialising 'little tigers', plus Singapore which is an international banking and financial centre of growing importance. The first four of these are somewhat overextended relative to their MAs, as you can see, but downside risk should be limited to mean reversion toward the MA in a secular bull market, which this remains for all but the most troubled markets. Singapore appears to be in the latter stages of its first step above the base, prior to a resumption of the medium-term upward trend.

Taiwan (weekly & daily), subject to political factors in its sometimes tense relationship with China, should be in an economic position to benefit from renewed strength by its giant neighbour. It has underperformed recently although today's upward dynamic is encouraging.

All resources markets stand to benefit from a resurgent Chinese stock market and economy, and perhaps none more than Australia (see Eoin's comments below). Australia's two mining giants and Autonomies, BHP Billiton (monthly, weekly & daily) and Rio Tinto (monthly, weekly & daily), have certainly performed like cyclicals rather than growth shares recently but they remain cheap and have begun to move up in line with China. With world-class asset portfolios, they should enjoy a re-rating during the bull market in China which I expect. (Full disclosure: BHP and Rio are in my personal long-term investment portfolio.)