Capitalist Roader Fund
The Shanghai Composite Index (SCI) closed down a little more than 0.3% for the week – basically unchanged, but still a recovery from Thursday lows that struck all of the Roader’s portfolio companies. Huaneng Power (600011.SH) lost 0.4% over the course of the week, echoing its lackluster performance the previous week, even after reporting a US$744.1 million 2009 profit. Guangshen Railway (601333.SH) lost 0.9%, and China COSCO (601919.SH), the Roader’s best performer last week, delivered a 2% loss, effectively erasing its prior gain.
Huaneng’s profits came on the back of a 6% increase in Chinese electricity use in 2009, and a 10.2% increase in power generation. The company forecasts it will generate 230 billion kilowatt hours in 2010.
The Capitalist Roader Fund is down 35.2% from June 3, 2008. The SCI is down 10.7% from June 3, 2008.
Red Dragon Fund
We reduced our exposure to Shanghai Airport (600009.SH) today, selling 400 shares at RMB18.65 per share and securing a small profit. The benchmark SCI has been fluctuating between 3,000 and 3,100; it rallied on Friday, led by Expo-related stocks, including Shanghai Airport. As the general market seems to be waiting to choose a direction (upward or downward), we plan to engage in some short-term trading. We may buy more Shanghai Airport and other hot stocks if valuations are attractive. For now, Expo-related stocks are still our focus.
The Red Dragon Fund launced 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.