Baillie Gifford China Growth

[jimmyfromlargs]

Do any folks out there have a POV on the situation on BGCG......I bought in at 4.37, clearly there was some exuberance shown at the share price, which was fair enough but now I see a decline in the NAV which is more of a concern.

Any comments or wisdom welcome......is something happening have BG been caught out....

PS there is a Netflix documentary...’The China Hustle’ which does not bode well anyone having a go at china investing.....looks awful

[Dod101]

Personally I think it is far too early since BG took over to have an sort of view on the Trust. They have only been in situ for about 6 months. In another 3 or 4 years we could think about it. Nothing has changed in China since I bought in early October at £4.18. China is risky but so are many places. I have not bet the ranch on it so will just leave it and see what happens. BG have not been 'caught out'. What do you mean by that?

Dod

[jimmyfromlargs]

Dod,

Thanks for your comment......

If you watch the documentary Netflix, quite a few investment houses in the US were ‘caught out’ by investing in companies that were simply shells. Investigators physically visited some of the manufacturing sites and found no activities to match any companies that were valued at the 100M USD level.

So this is the context, also today a negative article in the Spectator about investing in China.

I’m holding, but of course curious and watching...........Jimmy

[Dod101]

OK. I take your point. BG have an established office in China (Shanghai I think) and I also would rather trust them than many investment houses. Of course they can be 'caught out' as you say, just like anyone else. I think they would be more likely to admit it than some though.

I doubt that China has the regulatory framework that we like to think we have in the west so of course that is a risk but at the same time, the BG funds have been investing in China for a long while and I am prepared to believe that they will know their way around. I doubt for instance that they pick shares by simply studying the Chinese equivalent of the FT, at least I hope not. This is though a relatively small trust investing solely in China so the risk is no doubt higher than some, but so is the potential reward.

Dod

[Adamski]

I bought the OEIC version, BG China B, and saw it increase 20%, to mid Feb, and drop 20%. I think there are several reasons. They are a momentum stock investor so are badly hit in a sell off. I also held FCSS which I did much better with and reduced by less. China is of course volatile, any but if bad news from regulators or US T yields causes a sell down. And because of that arguably the sell off isn't related to fundamentals, but to sentiment, so should go back up.

Having said that, I sold out last week, and reinvested in Monks and Scottish mortgage, as decided my riskier holding are better with a global fund that just in one country, and this rollercoaster ride is too volatile for me personally.

[richfool]

I bought the OEIC version, BG China B, and saw it increase 20%, to mid Feb, and drop 20%. I think there are several reasons. They are a momentum stock investor so are badly hit in a sell off. I also held FCSS which I did much better with and reduced by less. China is of course volatile, any but if bad news from regulators or US T yields causes a sell down. And because of that arguably the sell off isn't related to fundamentals, but to sentiment, so should go back up.

Having said that, I sold out last week, and reinvested in Monks and Scottish mortgage, as decided my riskier holding are better with a global fund that just in one country, and this rollercoaster ride is too volatile for me personally.

Yes, I would endorse Adamski's comments in his last paragraph. I use global and regional IT's, but not usually country specific trusts (well, apart from VOF, a small play on Vietnam). Thus I get my exposure to China through Pacific Horizon (PHI) from a growth perspective and from JAGI from a growth and income perspective, plus whatever Scottish Mortgage and Monks give me.

[Dod101]

I bought the OEIC version, BG China B, and saw it increase 20%, to mid Feb, and drop 20%. I think there are several reasons. They are a momentum stock investor so are badly hit in a sell off. I also held FCSS which I did much better with and reduced by less. China is of course volatile, any but if bad news from regulators or US T yields causes a sell down. And because of that arguably the sell off isn't related to fundamentals, but to sentiment, so should go back up.

Having said that, I sold out last week, and reinvested in Monks and Scottish mortgage, as decided my riskier holding are better with a global fund that just in one country, and this rollercoaster ride is too volatile for me personally.

Where do you get the idea that it has been a roller coaster? After BG took over there was undue enthusiasm which drove the share price up to a silly premium well over the NAV but what matters is the NAV and that has not changed very much. Anyone would know that the initial enthusiasm would wear off pretty quickly and that is what has happened. Now the share price will hopefully settle down and the underlying investments will dictate the price. It takes a lot longer than six months though to show any trend so we must all just be patient. What did anyone expect to happen? The NAV would behave like Scottish Mortgage for the last year? That was exceptional by any standards.

Might be better to go for something like Pacific Horizons but Witan Pacific as was did nothing and that is why it changed into a China only trust. The irony is that until the last year or two, Scottish Mortgage was known for being quite volatile.

Dod

[everhopeful]

I will not invest in China. I don't like what they are doing in so many areas but leaving that aside I think its companies are just too difficult to value and the political risk is too great.

[TahiPanasDua]

My wife and I just got £2,000 in handouts from the Hong Kong government as part of their pandemic economic strategy. We no longer live there so have a bit of a conscience about taking the cash as we can't spend it as intended to bolster the economy.

it's not a fortune but the best we can think of is to invest the cash in a China IT. JP Morgan's is the current favourite.

TP2

[Dod101]

I will not invest in China. I don't like what they are doing in so many areas but leaving that aside I think its companies are just too difficult to value and the political risk is too great.

I understand that and it is a bit like not investing in tobacco companies but you could pick holes in many countries' politics and obviously with an investment trust, we are leaving the valuation to the investment manager. That is what they are being paid to do.

As I said earlier I am not betting the ranch on BG China Growth but I think they are worth a small investment.

Dod

[yyuryyub]

Regarding recent NAV decline ... I think this is just normal for an IT of this kind. There are all kinds of risks and if you feel the need to try to analyse after a fall of 10 to 20% in NAV, you're in the wrong place.

I was a Witan Pac holder (and also a happy long time Scottish Mortgage holder), so maybe I have a bias. I increased my holding in the new BGCG and then saw the premium rise to what seemed an absurd %tage. I decided to reduce my holding and did sell some, but some way down from the peak (of the day before, iirc). Today I bought a slightly larger quantity back at 452p. I don't pretend to be able to analyse the portfolio content in any meaningful way, but I can look at a discount/premium and make a judgement on that.

As a parallel, if I'd try to look under the bonnet of Scottish Mortgage several years ago, I'd quite likely have sold them for going so big with Tesla. Thankfully, I just let them get on with it