The Shanghai Composite Index (SCI) shuffled backwards this week, finishing 3.8% behind last week’s close to finish at 2,995.85. The SCI has danced out of 3,000+ territory with analysts no longer singing of a ‘V-shaped’ recovery, but a period of uncertainty where 2,500 may be the norm.
China COSCO Holdings (601919.SH) has overstepped the benchmark backing off 8.5% over the week. This comes despite the shipper narrowing its quarterly losses and cutting its deficit by around 50% compared to the previous quarter. A net loss of US$101.2 million was expected and we are certain that with bulk cargo volume and freight rates on the improve COSCO is a strong play to capitalize on the promising long-term prospects of China’s container shipping market. COSCO finished off at RMB13.15 (US$1.93).
China Vanke (000002.SZ) must have been listening to the same song as COSCO, kicking off an unpleasant 7.7% to close at RMB11.51 (US$1.69). This was a little surprising considering a net profit of US$433 million for the first three quarters was announced on Sunday, up 29.9% from the previous year. But we are not too worried here at the Capitalist Roader Fund; when the underlying value is strong we know the price will catch up sooner or later.
Marching to the beat of a different drum, Jiangsu Expressway (600377.SH) kept ahead of the benchmark a tidy 3.8%, with a week long crab-shuffle to finish ahead 0.2% at RMB6.18 (US$0.90). In response, Wellington management have changed their tune and increased their holding to 6.1%, having cut it back just last week. We know where we stand with this experienced roadie.
The Capitalist Roader Fund is down 28.8% from June 3, 2008. The SCI is down 12.8%.
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