Martin Lau's First State Regional China Fund has been generating top-notch performance in recent years. However, he is turning cautious on China. Why? One, the recent wave of optimism about Chinese stocks especially in consumer and pharmaceutical has become too euphoric for his liking. Two, many investors are so passionate about IPOs, and that is usually not a good sign. Three, further raising of interest rates by the Chinese government could cause Chinese stocks to tumble. Lau reckons there will be a series of rate hikes.
Lau has been cutting exposure to overpriced Chinese consumption stocks and remains light on property and financial counters. He is currently vested in property names like China Vanke and China Resources Land, bank China Construction Bank and consumption play Yantai. But all in all, he is not that excited about China anymore.
It is too late for me to take profit on SOHO (a property name) now, but I will sell it during the rally that follows this correction.
Update: I have sold SOHO at 6.32 on a brief rebound for a 29% GAIN IN 3 months.
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