QE is underway in Europe, but investors are already wondering where the money-printing machines will fire up next. China may have just given us a sneak peak…

Over the weekend, China’s top central banker Zhou Xiaochuan said China has “more room” for easy money policies.

Chinese investors celebrated this hint of relaxation: the Shanghai and Hong Kong stock markets had their strongest one-day performances in months. Capital flows from mainland China to Hong Kong via the new Stock Connect also set record highs.

This knee-jerk reaction by Chinese investors didn’t surprise us. Loose monetary policy has been the catalyst behind every major stock market rally since the 2008 economic crash. This makes the situation in China worth watching. The People’s Bank of China is terrified of deflation. If there’s one thing we’ve learned in recent years, it’s that central bankers will fight deflation at all costs.

Cheap credit punishes savers, but it can be an investor’s best friend—as long as you’re out of harm’s way. On that note, we at The Casey Report couldn’t be more excited about our stake in the Chinese stock market…