Last night it happened, yes you hear it right. Last night at midnight we invested slightly over 200,000 rmb in a new mutual fund of the China Merchant Fund.
Why did we pick that one? It was not because of a team that had a reputation of brilliant investments. Actually, friends at the China Merchant Bank said they preferred other funds, like the China International Fund Management (with J.P. Morgan Fleming as a foreign partner) or E Fund Management. The track records of their mutual fund teams are really very good.
The problem: their funds were already running around for a while and followed the upward trend. Buying into an existing fund is really not that attractive now the rates are going up so fast. So, we decided for the China Merchant Fund, whose past performance was also not that bad.
Now, we can sit back and relax, I hope, and we will figure out next some interesting international funds with China connections.
In short, why do I believe in this market? For the time being, there seems only one determining factor for the future of China's stock markets - apart from stupid acts by God of course. The investors have to believe that the government is not going to mess around with the stock markets. At the beginning of this century, the story the government was going to dump US$ 250 billion of non-tradable shares on the market caused a spiral down. Even every announcement this would not happen caused another plunge, since the investors did not believe those announcements.
Now, there seems this basic confidence the government is going to do it right. Listen what I say, it is not whether the government is doing it right or wrong, but what the investors think about the government.
When all goes well, we might in ten years time have a stock market that acts as a stock market and reflect the movements in the economy and the achievements of individual companies.
Update: at least today we made a first profit.
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