Siwei Zhong

Chinese Castle in the Air: The A-Shares Craze

what you mentioned is a long/short trading strategy commonly used by hedge fund.

however i doubt how would that work in the A-share Fund/A-share pair in your example

for any Long/Short, the trader must be positive on the Long and negative on the Short, or more precisely he anticipates a widening of the long/short spread.

I dont see any reason why that would happen to the A-share Fund/A-share pair of assets as A-share stock and A-share funds are both going up starting in Jan 2007.

A-50 index future contract is available in S'pore with very low trading volume.

Selling future contracts would NOT generate cash to play a long/short strategy, future contracts are traded with margin and marked to market daily, and cash settled on expiry date.

Morgan Stanley and iShares: Two China A-Share ETFs

discount to NAV shall never be a reason to invest in a ETF, there are a lot of ETFs whose prices are consistently below their NAVs.

for example, look at this Korean Fund ETF bp0.blogger.com/_UadJ8...

close to open may be, but one of the funds CAF invested is i-share A-50, this will hardly be converted into open because the fund itself doesn't have QFII quota, by Chinese policy it (or any foreigner without QFII) cannot invest in A-share. Besides, most of the other funds CAF invested in are local Chinese funds, again foreigners are not allowed to participate. So the benefit to CAF shareholders are very remote if this 'close-to-open' is a reason.

I personally do not believe in Fund of Funds anyway the only exception is Fund of Hedge Funds with proven track records. Reason is that I do not have the capital to invest directly in those reputable hedge funds.

Morgan Stanley and iShares: Two China A-Share ETFs

Closed End Fund means a fund which will not accept new subscription once its initial placement (which can be private or public placement, if it is a public placement, it is an IPO) is completed. ie, the fund is 'closed'. ie, if you cannot get allocated during the initial placement, the only means to buy it is through the secondary market, the same way like you buying /selling any other stocks

Exchange Traded Fund (ETF) is any fund which trades on any stock exchange.

CAF is both an ETF and Closed End Fund.


Ziwei Zhong
www.LetsThinkChina.com