Capitalist Roader Fund
The Shanghai Composite Index (SCI) closed up nearly 2% for the week. China COSCO (601919.SH), the Roader’s best performer this week, delivered a 2% gain, and its long-term prospects improved around expectations that it would successfully win its bid for a rate increase on US west coast routes. Huaneng Power (600011.SH) lost 0.4% over the course of the week, but Guangshen Railway (601333.SH) gained 1.4%.
Huaneng’s slight drop could be attributed in part to its announcement that it would issue US$732 million in 270-day financing bills to repay bank loans, but funding concerns around the company should be a minor issue. Otherwise, a rather slow week on the whole, even if it helped pare some of the Roader’s losses.
The Capitalist Roader Fund is down 34.7% from June 3, 2008. The SCI is down 10.7% from June 3, 2008.
Red Dragon Fund
A long overdue update: We saw more than US$20 billion flow into Shanghai Internatonal Airport (600009.SH) after it tumbled on Monday, pushing its price back up. Hongqiao airport’s second runway has started taking flights on a trail basis and Hongqiao’s Terminal 2 recently opened. We think there’s a good chance that Shanghai Airport will rally if the company announces an acquisition of these assets and the shipping hubs at Pudong Airport from its parent. The 2010 World Expo is just 43 days away, and we are bullish on Expo-related companies. We’ve now made a paper profit on Shanghai Airport, which is our major holding at present.