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The GCA Greater China Fund which is managed by California based Gerken Capital Associates with a team of regional investment experts, gave some interesting insights into the Greater China stock market in an investor communication obtained by Opalesque. In August 2007, the fund was up 1.54% (27.38% YTD). The fund was launched in December 2005 and returned 24.69% in 2006.

Gerken Capital said the recent announcement that Chinese investors can invest in the Hong Kong market was one reason the Hong Kong market set new highs before dropping in mid-August. "At the current index level there is little investment opportunity and a speculative environment. To expect that China retail investors will push up Hong Kong dual listed stocks is a risky bet. August 2007 was a highly volatile month with no clear direction positively or negatively with which to formulate any directional market strategy."

Gerken continues explaining the fund started August very conservatively, operating with a net exposure of 28.1%. " We maintained a net exposure average of 30.5% in August with a relatively small number of stocks in our portfolio and moved into cash before a heavy drawdown toward August 16th. Our largest gain occurred on August 21st when the Hang Seng index experienced its biggest two day gain in six years. Notwithstanding the August 16th decline we remained cautious throughout the remaining period in the month consistent with our view that the Hong Kong market’s behavior was predic......................

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