Capitalist Roader Fund: Sub-optimal's the word (Hold)

A shorter post today, because quite frankly we don’t want to have to think about our portfolio much right now. As of just before noon on Friday, the SCI has fallen back under 2,000 points – and given the Dow’s 679-point drop on Thursday, we don’t much think Chinese investors are going to be in a buying mood this afternoon.

Aside from stomach-churning drops (one financial analyst explained the upside to me this week by noting that “ultimately, you can only fall 1,000 points so many times before you just run out of points”) the big story in mainland markets this week was the China Securities and Regulatory Commission’s announcement that it would be introducing short selling and margin lending.

Reports today indicate that this will be going ahead soon, but for now the Capitalist Roader Fund can’t make money in a falling market. And we’re still stubborn in our refusal to convert paper losses into real ones.

That means more of the same: gritting our teeth and holding. Anhui Conch Cement (600585.SH), which we continue to think is undervalued, is now threatening to fall below RMB20 (we bought in on June 3 at RMB55.97). Industrial and Commercial Bank of China (ICBC, 601398.SH) is now down almost 25%.

Overall, we’re doing slightly worse than the SCI, which has fallen more than 42% since June 3. And we’ll leave it at that until next week.