Capitalist Roader Fund: HOLD-Loose belts keeping investors smiling

China’s central bank announced this week that moderately relaxed monetary policy will continue in the near future, despite a warning from the Chairman of China Merchants Bank that continued loosened policy may give rise to asset bubbles. Fears of policy changes have been driving market sentiment in the last few months and this week has been no exception, with the Shanghai Composite Index (SCI) adding on a cheeky 5.6% for the week, hitting the bell with 3,164 under its belt. Maybe it was just the smile on investors’ faces driving prices, with the announcement of Mickey Mouse and his entourage agreeing to set up shop in Shanghai.

In a presentation to investors this week, China COSCO Holdings (601919.SH) said the company would be able maintain container freight rates at current levels throughout the fourth quarter, but box shipping will be challenging in 2010. Despite this, Mr Market had faith, allowing COSCO to regain some ground on the SCI picking up 7.68% over the week to close at RMB14.16 (US$2.07).

China Vanke (000002.SZ) hitched a ride with the SCI train for the week, lagging the index only 0.5%. Vanke finished at RMB12.1 (US$1.77) with no surprises. No news is goods news and we’re happy to see this play moving ahead.

Jiangsu Expressway (600377.SH) was once again subject to the movements of its major stakeholders as US-owned Capital Research and Management announced Monday that it cut its stake in Jiangsu Expressway’s H-shares to 7.85%. This news made investors in Jiangsu Expressway jumpy and forced it to miss the SCI train. Jumping on one of its well-managed roads instead, the expressway operator made up an otherwise impressive 3.9% to finish at RMB6.42 (US$0.94).

The Capitalist Roader Fund is down 27.08% from June 3, 2008. The SCI is down 7.9%.