Capitalist Roader Fund:
It has been another lackluster week for the Shanghai Composite Index (SCI), which closed a hair above 2,600 points on Thursday after reaching nearly 2,700 points during trading on Tuesday. Beijing seems intent to maintain its policy holding pattern, and with neither terribly good nor terribly bad news to drive it, the market is stuck in a rut.
That’s less true for our star pick, Joyoung (002242.SZ), which at Thursday’s close was up nearly 10% from its August 20 purchase price. The company’s stock price has been buoyant since late August, despite the company’s announcement of a 13.91% drop in first-half net profits.
Huaneng Power (600011.SH) had been muddling along until today, but the announcement that parent Huaneng Group would inject energy business assets from Shandong into the company to boost development helped to push the stock up more than 5% from Thursday’s close by mid-day today. That’s almost as much as China COSCO (601919.SH) has fallen over the week. You win some, you lose some.
At Thursday’s close, the Capitalist Roader Fund was down 39.2% from June 8, 2008. The SCI was down 24.2% from June 8, 2008.
Red Dragon Fund:
It seems that our cautious approach was correct. The market has encountered several blows in recent days, including 3.5% inflation in August, expectations of an interest rate hike that could undermine banks’ interest rate margins, the rumor that regulators could increase commercial banks’ capital adequacy requirements in response to the new Basel III rules, and the approach of the mid-autumn and National Day holidays.
As a result, we’ve been seeing a net outflow of funds from the equity market while central bank officials send mixed signals about interest rate hikes. We continue to track stocks involved in emerging sectors: new energy, new materials and new energy vehicles.
The Red Dragon Fund launched in August 2005 and is run by an industry professional. The Capitalist Roader Fund launched in June 2008 and is run by China Economic Review’s editorial team. Both funds are run solely as an editorial exercise.