Another rough week-and-a-bit for the Capitalist Roader Fund, but we’re still not taking any action other than biting our fingernails. Anhui Conch (600585.SH), once hoped to be the foundation of the fund, has been acting more like a pair of cement shoes: it’s now down more than 31% since June 3. We still believe in the company’s fundamentals, but we’re starting to wonder if it might be worth dropping it for now and picking it up again later at what would almost certainly be a lower price. We’ll probably just wait it out, but watch this space.
Our other purchase, Industrial and Commercial Bank of China (ICBC) is down a less-grim 6.47%, meaning we’re out 18.3% for the fund overall. On the bright side, we’re still outperforming the Shanghai index which is down a bit less than 22% since June 3.
The volatility of the markets has meant we’ve seen a couple of encouraging days here and there, but the overall picture has not been bright. China Southern Airlines (600029.SH) is the least-poorly-performing of the stocks we’ve been monitoring closely, but it’s still down more than 5% since July 7, when we started watching. Fortunately, a “five-star” safety award, given to the airline for 169 consecutive months of trouble-free flying, suggests the airline’s fleet is faring better than its share price.
Ultimately, we’re not in a buying mood right now, and a bit of liquidity is always nice – especially with the RMB’s biggest one-day gain in four months coming the day before the CSI 300 officially became the world’s worst-performing index this year.
But we’re not going to be selling our holdings either. We don’t expect to witness huge gains in the current environment anyway, and we think both Anhui Conch and ICBC continue to have potential. Besides, exiting the market would make for a boring fund, so we’ll continue to wait it out.