We’re quite frankly running out of words to describe the state of the markets – “grim” and “dismal”, which sounded so appropriate at first, no longer seem to capture the pervading sense of inevitable doom around A-shares. That’s despite – or perhaps because of – noises from Beijing that the government could step in to prop things up. We noted in the CER Weekly Email Briefing yesterday that half-hearted moves by the government earlier this week only strengthened the sell-off. As trading stops for lunch on Friday, the Shanghai Composite Index (SCI) is down another 2.4%, to around 2,372. Remember when everyone was so sure that the government wouldn’t let the SCI fall below 3,000? Ha.
So how is the fund doing? We’re down 36.9% as of this writing, meaning that the value of our initial RMB10,000 fund has been reduced to RMB6,310. Of course, those are just paper losses (or so we keep telling ourselves) because we still haven’t sold anything. As has been the case, the only good news is that the bad news isn’t getting significantly worse. Anhui Conch (600585.SH) continues to wallow around 52% below the price we bought it, and Hubei Guangji Pharmaceutical (000952.SZ) is still down about 40% – more or less the same as last week. Industrial and Commercial Bank of China (601398.SH) has also been blessedly boring.
So, still no action from us, and we won’t make any forecasts for the coming weeks. We just hope that we don’t keep going down the only road we’ve ever known.