The week started off well enough for the fund, but as of noon on Friday, things are once again looking grim. Our purchase last week of Hubei Guangji Pharmaceutical (000952.SZ) nicely encapsulates the kind of volatility we’ve been dealing with. A brief rally on Monday saw it rise 2% from the RMB17.00 we paid for it, but the days since then have seen it fall steadily. When the markets closed on Thursday, Hubei Guangji was trading down 10% from our purchase price, at RMB15.30.
But with the Olympics a week away, we’re not making any moves. Part of that is due to the government’s widely reported warnings to fund managers to avoid saying anything around the Olympics that could harm the stability of the markets. While expecting the government to come to the rescue might be unthinkable in markets like the United States (coughFannieMaecough), the Chinese government has shown before – as with the relaxation of the stamp duty earlier this year – that it can and will intervene in the market to try to preserve a harmonious environment for investors.
We continue to be encumbered by Anhui Conch Cement (600585.SH), now down 35% from June 3. That has helped pull the CRF down more than 21.5% since we entered the market on June 3, which means we are now officially doing worse than the Shanghai Index, down about 20%. But Anhui Conch has fallen so far that we don’t see any point in selling it while it’s so low.
So we’ll continue to wait things out for now. Here’s hoping a smooth Olympics and lots of gold medals will help boost everyone’s optimism.