Capitalist Roader Fund:
The Shanghai Composite Index (SCI) was up 2.6% this week, and the rising tide raised all of the Roader’s investments. Huaneng Power (600011.SH) gained 0.96%, and Guangshen Railway (601333.SH) rose 1.3%. Despite faltering during the middle of the week on tightening concerns and reports of a 37% decline in its 2009 profits, China COSCO (601919.SH), the Roader’s best performer this week, delivered a 2.4% gain. As global demand picks up and tightening concerns abate, all three of the Roader’s investments appear poised to break out, so we maintain our holdings.
The Capitalist Roader Fund is down 34.7% from June 3, 2008. The SCI is down 8.1% from June 3, 2008.
Red Dragon Fund:
We sold our remaining Shanghai International Airport (600009.SH) holdings on Tuesday, locking in a 4% profit, and grabbed some Jiangxi Ganyue Expressway (600269.SH) the next day. Our new purchase reflects a more conservative stance toward the current market.
The market edged higher this week – the SCI broke the 3,100-point barrier, and is now set to move in the 3,100-3,300 range. The next week looks auspicious. We hope the baton of the rally will be passed on to second-tier blue chips like Ganyue Expressway.
Ganyue is meant as a short-term play, as we don’t expect it to rise significantly. We see the current rebound as more of a blip. Backbone investors are trying to determine which way the economic winds are blowing, particularly regarding changes to monetary policy. These investors will be inclined to retreat if authorities decide to draw liquidity out of the market.
The Red Dragon Fund is up 103% from August 19, 2005. The Shanghai Composite Index is up 174% from August 19, 2005.
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.