China

Chinese shake

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Dear Fund Director,

Just in case the Greek turmoil headlines are hiding some other matters in current financial markets, I would like to inform you about the big sell-off in the Chinese stock market, about -20% in the last 5 days, and propose some questions you may pose to your managers.

According to data compiled by Bloomberg, almost 200 stocks halted trading after the close on Monday, bringing the total number of suspensions to 745, or 26 percent of listed firms on mainland exchanges. Most of the halts are by companies listed in Shenzhen, which is dominated by smaller businesses.

In this sense, I would suggest that you gather information about the impact in the funds under your mandate in 4 ways:

1 – Which is the exposure of the funds to these markets?

2 – Which has been the impact on performance due to these stocks during these last days (weeks, months)?

3 – In which way will the suspension of trading in terms of fund valuation be handled?

4 – What is the fund manager’s opinion on this matter and what is he planning to do in each scenario?

Having said that, find below an interesting chart and link to Bloomberg on the rise and fall of China’s Equity Market and the policies carried out during these last months for a better understanding to the matter.

china

Yours faithfully,
The Indeep Fund Director

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