After missing the investment deal of the century last week – if we can slightly alter the definition of “century” to mean “September 2008” – we were a bit bitter, to be frank. Bitter enough, anyway, to be smugly dismissive of the SCI’s prospects for this week: “I’ll hazard a guess that Monday’s performance won’t be quite so impressive,” we (or rather, I) said.
In my defense, Monday’s big gain wasn’t as impressive as Friday’s. After every single listed company on the SCI jumped 10% last Friday, pushing the index itself up 9.46%, the SCI rose a mere 7.77% on Monday.
Our bitterness continued when the jump on Monday nicely prevented us from loading into Industrial and Commercial Bank of China (ICBC, 601398.SH) for a second time. It was up another 10% shortly after the markets opened – the muscle-bound bouncer known as the China Securities Regulatory Commission informed us that we were not welcome to join the party.
The 17.23% jump on Friday and Monday suggested the real possibility that “this sucker could go down,” to quote George W. Bush, so we decided to hold off on further investments. We also chose to continue to hold onto our existing ICBC and Anhui Conch Cement (600585.SH) shares.
There were reports this morning that the State Council approved a CSRC plan to allow short selling and margin lending (even as US and European regulators are trying to rein in the practices). We’re still trying to figure out what this will mean for the fund and for the markets overall, but it should make things interesting.
Unfortunately, we won’t likely hear about the specifics of the plan until after the October 1 National Day holiday. Check back then to see what’s in store for the fund.