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Net short exposure helps China Mantou Fund gain 1.1% in November amid slumping markets The China Mantou Fund, managed by HK based Pacific Sun Investment Management, rose approximately 1.1% last month while the mean return for the 8 stock indices shown in this report was -10.1%. The Shanghai and Shenzhen composite indices were down 18.2% and 15.5%, respectively. Pacific Sun said a contributing factor to their steady performance came from some of the mid and small cap holdings, many of which traded flat the previous few months when large cap stocks soared following China’s plans to roll out the Individual Investor Scheme announced on August 20th.

The fund also made some portfolio adjustments in early November because of valuation concerns and weak global markets on back of the continued fallout from the global credit worries. According to an investor communication obtained by Opalesque, the fund sold some higher beta stocks - "our long exposure was reduced to 97% from 117% at the end of October while our short exposure was increased slightly to 20%. We were also net short large cap H shares and we sold the remaining A shares and thus had no long positions in China’s domestic A or B share listed companies from early last month onwards. We have steadily decreased our exposure to mainland listed firms during the course of this year given valuation concerns and poor forward earnings visibility. Corporate website: ......................

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