Fund managers diary

Gabrielle Knights is the manager of the Way ­Investments’ Asian Spice fund. Her diary runs from October 11-17.


Another stunning day, both in terms of weather and Asian equity markets. It was announced towards the close of the Hong Kong market that China had increased the reserve requirement ratio for the six largest banks because they had been lending too aggressively in September. In other words, China is tightening without raising interest rates as it does not want a rapid rise in the renminbi, particularly when Japan is cutting interest rates and it looks as if a second round of quantitative easing is arriving in America. The People’s Bank of China governor, Zhou Xiaochuan, had said in Washington DC at the weekend that he will allow further appreciation of the renminbi, but at a slower pace and that quantitative tools are adequate to contain inflation. This bodes well for good performance from Chinese equities.


Bought some shares in Independence Group in Australia, a profitable nickel company that also owns 30% of Tropicana, one of the best gold prospects in the world (Anglo-Gold owns the remaining 70%) which is about to have its bankable feasibility study, the crucial step on the road to production. Asian markets, with the exception of China, are weaker as the Korean company Posco, the world’s third largest steelmaker, reports its first quarterly decline in earnings for a year and cut its full-year profit forecast by 7%. (article continues below)


Switching on my Blackberry as usual at 6.30am, I see that West China Cement is up sharply on the back of the Chinese government’s announcement that it will provide building materials to rural areas, which need them urgently for infrastructure. The price reached my target – we had made a 27% return on our investment in just two and a half weeks – so I sold them and switched some of the proceeds into Guangzhou Pharmaceutical, the largest pharmaceutical distributor in southern China. It has a tie-up with Alliance Boots and its WangLaoJi herbal tea sales will improve in November during the Asian Games in Guangzhou.


Spend the day at various meetings in London. One is with James Kynge, the editor of China Confidential and Jing Ulrich, head of China at JP Morgan. They say that rural discretionary consumption is a multi-year theme in China. Meet my husband at the Old Vic in the evening to see Noel Coward’s Design for Living, which makes us giggle.


The Chinese Communist Party discusses the broad principles of the government’s 12th five-year plan at its 17th Congress. China is expected to emphasise the switch from investment to consumption as the driver of economic growth and to promote the service sectors of the economy. In the evening I dash up to London again for the engagement party of some friends who are getting married in December.


We always have eggs for breakfast at the weekends as they are one of my father’s favourites. After my usual household chores I pick some pears in the garden and make a meringue and a lamb casserole for lunch tomorrow. My husband and I walk to St Catherine’s Hill from where we can see Winchester basking in its misty, mellow autumnal glory.


Some old friends come for lunch and we have a jolly time catching up with all their news. One of them has been doing some work with the Vatican and told me that the largest single donor to that institution in 2009 was the government of Venezuela, to the tune of $1 billion (£620m).