All right, all right, so we should have waited another week. After our smug exit from the cement sector with our sale of 100 shares of Anhui Conch Cement (600585.SH) last Friday, we watched as its share price rose no less than 16.68% this week. In our defense, we kind of said this would happen, and we still think the rally is misguided.
Or perhaps not misguided so much as based on illegal foundations. When reports emerged early this week that the China Banking Regulatory Commission is probing illegal fund inflows into the market, we can’t say we were entirely surprised. It could all be a huge misunderstanding, but you’ll excuse us if we decide to insulate ourselves for now with a nice, warm blanket of cynicism.
Dodgy or not, the rally was not enough for the fund, which fell further behind the market this week (itself down 2.56% for the week) as Industrial and Commercial Bank of China (ICBC, 601398.SH) dropped 3.53%.
We’re aware that nothing in the history of ICBC’s share price indicates that it will ever outperform the market, which could prove problematic as outperforming the market was our fund’s founding goal. Two options suggest themselves: exiting the market entirely, or buying into some smaller cap stocks in hopes of capitalizing on market volatility, with ICBC hopefully adding a bit of stability. The next few weeks could be interesting.