The Shanghai Composite Index (SCI) closed down a little less than 1% from the start of the week. On the back of expectations that it would return to profit, China COSCO (601919.SH) closed the week up 2%. On the other hand, Huaneng Power (600011.SH) surrendered its Thursday highs to end the week only slightly higher. We held onto our shares of both.
As to the Capitalist Roader’s promise to take the upcoming National People’s Congress as a chance to speculate, the fund followed through and purchased 200 shares of Guangshen Railway (601333.SH) at RMB4.55 (US$0.67). Regardless of the specific initiatives that the NPC rubber stamps, we anticipate that improved economic outlook and continued macroeconomic spending will offer a company like Guangshen – with passenger and freight routes that connect parts of Guangdong province internally and to northern railways – significant profit opportunities. In the case of an economic downturn, we also believe that reverse migration would still benefit Guangshen’s passenger lines.
The Capitalist Roader Fund is down 34.4% from June 3, 2008. The SCI is down 12.0% from June 3, 2008.