Friday, August 10, 2012

Reversion to mean

Some stocks or commodities generated poor or good returns for good reasons. Poor fundamentals or stretched valuations but selling for a high price will produce worse results. Improving fundamentals or modest valuations will produce good returns. The European stock markets performed poorly is understandable. Shanghai Composite Index generated closed to 50% losses is getting more attractive by days. The average PE for A shares selling for 11 times PE is very cheap. I have completed my visit in China. There is no doubt that it was slower than before but I could not find any signs of hard landing.  The day of Reversion To Mean will come. My Dollar Averaging strategy has been activated recently. 20% of Turtle Portfolio cash will be moved into Chinese equities spread out over a period of 8 - 12 months.

Funds that worth investigating:

1. Morgan Stanley China A Share Fund. It's a closed end fund listed in NYSE(CAF). It is selling close to 10% discount to NAV but with 13% market distribution yield is very attractive.

2. United SSE 50 China ETF

It is an ETF that has direct exposure to A shares listed in Singapore Stock Exchange. It has just recovered slightly after hitting a new low of USD 1.54.

3. BRIC mutual funds 

4. Mutual funds specialize in H Shares

5. CIMBC25 listed in KLSE.  I sold off last year at RM 0.83/share. It is about time to get back in soon.

Have a good weekend everyone.

1 comment:

Kris said...


ETF in Malaysia is NOT very popular as compared to US ETFs such as SPY,GOLD, etc, hence the liquidity is very low.

I guess people still like to punt in penny stocks in Malaysia as seen in the volumes these days