“Dawson & Fielding Inc.” Knee jerk equity market reactions to monetary tightening in China will abate.

Sources close to “Dawson & Fielding Inc.” apparently believe that the current sell off in equity markets around the world are overdone and cite the fact that the PBOC (People‘s Bank of China) is still projecting that some $1.1 trillion of new credit and lending will be made available in 2010.

Global equity markets have fallen sharply since the PBOC announced that it was raising rates on short-term loans to China‘s mostly state-owned banks in an effort to curb growing inflationary pressures and to avoid asset bubbles, particularly within the real estate sector.

Many investors fear that China‘s strong recovery from the global slowdown may be compromised if stimulus is withdrawn too quickly but analysts at “Dawson & Fielding Inc.” argue that the PBOC‘s was a prudent measure which would have little or no effect on the expansion going on elsewhere in the world‘s third largest economy.

In an unscheduled email to clients this week, the firm advised its investors to avoid being herded into selling off equities and other assets on the market‘s interpretation of the news from China.

Instead, “Dawson & Fielding Inc.” suggested that the sell off might be an opportune moment to acquire stocks in defensives like pharmaceuticals, tobacco and supermarkets in preparation for what it says may be a more protracted sell off in the 2nd quarter of 2010.