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Did Greater China Fund (GCH) tumble 30% today? December 20, 2007

Posted by deminvest in China stock, funds, GCH, growth stock, stocks that pay high dividends.


GCH Greater China Fund did NOT really tumble 30% today. GCH shareholders did not lose money on GCH today!

I opened with this simple crystal clear sentence, so all desperate investors like will start smiling… or breathing… again.

I will explain… Actually not yet… I was so desperate when I looked on Google finance where it seemed GCH -30%, that I don’t want anyone go trough this like me. You may believe more to Google than to my explanations (I would) so I’ll give you the LINK TO OFFICIAL GCH website, where you’ll know you haven’t lost money on GCH today.

Now that everybody should be reassured, I will try to explain what I understood:

GCH stock price went down $11.30 today at opening only because GCH will pay $11.30 per share cash to us stockholders. All we need to do is wait to get the money on our bank accounts, which should happen on the second week on January.

Since GCH is my first holding, about 8% of my portfolio, you can imagine how I felt when I saw this graph showing GCH down from $36 to $25, which is more than 30%.

I hope I shortened the suffering for whoever bumped in this Blog and owns GCH shares.


1. jimmypoonchan - December 21, 2007

I have to say that I am a big time China growth fan because with 1.3 billion people at over 10% GDP growth, that’s really great and full of opportunities to make $.

I don’t want to tell you buy, sell, hold or short GCH. I like to provide you the major holdings of GCH and let you decide what to do.

GCH’s major holdings as of 10/31/2007 :

1. Petro China, 4.6%. Hang Seng and H share’s component. If you’ve been to China, you pretty much know that up to today, everywhere you travel, it’s hardly able to see a foreign gas station, all you can see is PTR or SNP. Very close to monopolized business.

2. Hong Kong exchange, 4.6%. A Hang Seng component. It’s the stock exchange of Hong Kong. The most recent quarterly financial report of 9/30/2007 is up 197% from the same period year before.

3. China Communication Constructions, 4.4%. H share index component. Building roads and bridges, designing harbour and other heavy constructions. Compare the 2006 to 2005 earnings, the growth is 43%. The future of this company is, expending overseas business. With Chinese government’s connection with the third world, I think they going to do better.

4. Guanzhou R & F properties, 4.2%. H share Index component. 2006, earnings growth is 41%. The real estate market is under pressure from Chinese central government. Properties are not going to move up as fast as before. Cheers to the Chinese Government, protecting the normal people’s living. Don’t get me wrong, I think they still going to do well but not able to mark up their price 20% a year in 2008.

5. China Mobile, 4.0%, Hang Seng and H Index component. I love this one. China has 13 billion people, still got plenty of room to grow. It’s unbelievable for a 342B market cap company to grow at over 20%.

6. China Merchant Bank, 4.0%. H index component. Earnings is up 57% in 2006 compare to 2005. First half of 2007’s earning is already equal to 90% of 2006’s earnings. Good or bad, you judge.

7. Indusrial and Commercial Bank, 3.5%. Hang Seng and H index component. The first 6 months earnings is equal to 83% of 2007 earnings.

8. China shipping, 3.3%. No commend to this one because according to the English name, it could be 2866.hk or 1138.hk. Both of the companies are H index component.

9. China Overseas Land, 3.2%. As of 6/30/07, the last 3 quarters earnings are up 48%, 54% and 60%.

10. Zijin Mining, 3.1%. H index component. as of 6/30/2007, earnings are up 81% compare to year before. It’s affecting by the Gold and other color metal market.

2. mobioevo - December 22, 2007

The returns China is getting right now is amazing but I am skeptical of future growth. 1 billion people is a lot of workers, but it also means a lot of poor people that get mad when the wealth is not distributed to them.

China has no solid property rights. Buying land in China is leasing it from the government for 70 years. What happens when that lease is up?

How long can an entrepreneurial spirit remain in China when people are not free to say what they want and be critical of those in power? Capitalism is all about finding problems, creating a solution, and then profiting from that solution. A government that suppresses the grievances of problems cuts off that pipeline.

What happens when those people who have gained wealth want a say in the matters of society? We have already seen how brutal the government can act on those who want some democratic reform.

I hope China can continue to grow but the path they are on now makes me nervous.

3. EuphoricVideos - December 28, 2007

I am sure China will continue to grow, maybe not at the same GDP growth rate as before, but that will still easily outpaced the USA GDP growth. However, the equity valuation of most Chinese listed stocks are at really high PE, so it is also much more risky than comparable US-listed companies.

I am still going to hang on to the GCF shares that I picked up in 2007, and hopefully it will get above the $35 recent highs. If not, I will have to look for another horse to ride and get my overall portfolio value higher.

4. Edward - January 24, 2008

I am a novice in the stock & share, especially dealing with China’s Funds.

Are there any brokers dealing with small investment capital for China Funds investment? (i.e: optionsexpress etc)?

Thanks for advice!

5. Deminvest - January 24, 2008

Edward, I don’t think there is any specific broker for China. You can buy funds like GCH or FXC on any broker. I use zecco.com because it offers 10 free trades a month, but you can really use any.

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