The Capitalist Roader Fund is getting stir-crazy. We’ve been a cash-only fund since February, when we sold Anhui Conch Cement (600585.SH) at RMB32.90. Excitement about infrastructure and government spending pushed Conch up to around RMB45 in early May, but its performance has been distinctly lackluster since then. It closed today at RMB39.84.
In considering what kind of move we might make, we are naturally looking at what sectors are going to benefit from the government-led investment that is keeping the economy going. Property is one option, but we would be late to the party. Developer Gemdale Corp (600383.SH) is up 166.4% this year, making China Vanke‘s (200002.SZ) 70.57% year-to-date performance look shoddy in comparison.
Other potential moves include another infrastructure play, in this case one more tied to specific projects. Shenzhen Expressway Company (600548.SH) is one option, its recent acquisition of the Jihe East Expressway likely to have a positive effect on the company’s finances. Beijing’s health care reform has also created opportunities, specifically in health care-related IT firms.
The fund remains down 33.1% since June 3, 2008. The Shanghai Composite Index is down 20.1%.