Time to focus on China Fund?

The Shanghai Composite Index declined 1.74% today to end at 2,147 points. About six months ago, the index was hovering between 2,300 points to 2,400 points. China equity market was impacted by poor economic growth during first half of this year.

I was drawn to this fact and began looking at investing in China equity again.

Back in April 2008, I invested in First State Regional China Fund (SGD) when the Net Asset Value (NAV) per unit was $1.8833. I sold them in two tranches: one in April 2010 and the rest was sold in December 2010. The NAV in April 2010 was $1.9363 and NAV in December 2010 was $2.1189. Capital gain was about 4% over two-and-half years.

This Fund invests primarily in securities issued by companies with either assets in, or revenues derived from, the People’s Republic of China, Hong Kong and Taiwan. (Source: Funds factsheet from First State) Its fund size is about S$439 million. The current NAV of this fund has dropped to $1.9231 as at 31 May 2012.

At NAV of $1.9231, the fund is back to the level seen two years back when I sold some units of it.

As a long-term investor, I am looking at China getting back to strong economic growth when the current global economic crisis blows over. The timing of this is uncertain but my sense is that China will do all it could to lift its economy to maintain stability in the country.

As a suggestion, a periodic purchase of units in the fund will allow investor to catch the fund at different prices instead of one big lump sum purchase of the fund. This way, one may catch further decline in price per unit of the fund.

Caution is necessary. First State Regional China Fund (SGD) has a risk level of 8 out of 10 and is a narrowly-focused fund (Country: Greater China).

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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