Well, that was different. The Shanghai Composite Index (SCI) closed down 2.98% today to end the week at 3,046.97 points. The Shanghai market lost 6.55% over the week as investors doubted Beijing’s statements that it would avoid tightening measures. We tend to believe Beijing, suckers that we are, and so have decided to stay put.
Given our investment history, it’s not surprising that Jiangsu Expressway (600377.SH) beat the market on the downside. It lost 3.86% today to end the week down 7.57% at RMB5.98 (US$0.87), meaning that we are once again officially losing money. But we are not despairing. If anything, we’re seeing this week’s slide as a buying opportunity.
You could blame our belief in Beijing’s words, but there’s more to it than that. Very few people would argue that China’s recovery is on a solid footing; assuming that the vast majority of people are not wrong (admittedly, not a completely safe assumption), it is simply not the time for Beijing to be clamping down.
Add to that comments made at a CER breakfast event a month or so ago by J.P. Morgan Chairman of China Equities Jing Ulrich. She verged on ecstatic when talking about the potential of China’s economy, and mentioned a target level for the SCI this year of around 3,500. The general tone of economic commentary is turning far more positive, with some observers upgrading their growth forecasts for the year.
In short, we’re considering another move into the market, perhaps an index-heavy choice in commodities or property. This is, of course, based on reading the market’s dip this week as just that. We may well be wrong, but we think there’s good reason to believe we’re right.
The Capitalist Roader Fund has lost 33.95% since June 3, 2008, while the SCI is down 11.3%.