Morgan Stanley China: Don't Let Panic Selling Scare You

| About: Morgan Stanley (CAF)

There seemed to be panic selling yesterday of the Morgan Stanley China (NYSE:CAF) closed end fund which I first mentioned back in May. The fund closed yesterday at a whopping discount to NAV of -32.5%. I picked up some shares near the close.

What makes this trade especially attractive is that CAF has had very large gains this year that will likely pay big year end tax distributions. This usually causes the discount to NAV to narrow considerably, since shareholders re-capture some value at the NAV price.

Caution: This trade is speculative and CAF can be very volatile, but I think the risk/reward for an active trader is quite good here.

Disclosure: I am long CAF shares.