Fund Managers Diary

\"Eight is a lucky number for Chinese as the word has a similar pronunciation to wealth\"

Monday Apparently, size does matter. Food inflation has led to drastic measures as Pizza Hut in Hong Kong has shrunk its large pizza from 12 to 11 inches. What will be next – a pint is no longer a pint? I receive a call from Singapore to update me on Raffles Education, as it is trying to decide whether or not to spin off its China business at 40 times price/earnings.

Distance Learning, a China web-based company specialising in professional qualifications, had to lower its original initial public offering price to 20 times just to get it started. Obviously, Raffles is still living in 2007.

Tuesday Dow and Nasdaq are off 2% and Asia’s not far behind. Merrill Lynch has just offloaded $30.6 billion (£15.5 billion) of debt for $6.7 billion to an affiliate of Lone Star Funds, using the classic Asian business model – by lending them $5 billion to complete the deal. No doubt this is Merrill’s cash raised from selling their 20% stake in Bloomberg. Temasek buys $3.4 billion of new Merrill Lynch stock for only $900m because of a $2.5 billion reset payment for losses incurred in its last purchase. Genius. I can see the caricature now, Temasek in tights and a cape with “Cash is King” emblazoned on its chest.

Wednesday Midas Holdings, a supplier of aluminium for train carriages, has been drifting despite being in a great sector. Is the market worried about a 1-2% fall in margins because of rising costs? Is 30% not good enough? I think the market is waiting for a decision on whether or not the Chinese government will take a stake. Hold.

ThursdayA Thai court has found Potjaman Shinawatra, wife of Thaksin, the Manchester City football club owner, guilty of tax fraud and sentenced her to three years in jail. However, she is freed on bail for Bt5m, which is about £75,000. Bearing in mind that this is about eight times the average Thai salary, cash really is king at the moment. I think it is fair to say that Thaksin will probably not get back into politics now; unfortunately, Thailand is a small place and you do not necessarily need to be prime minister to be in power.

Friday What a volatile month July has been. The Golden Dragon is down almost 2%, time to drip in a smidgen of cash next week. With markets so short term, I have a feeling certain areas will run because the Olympics are around the corner.

Saturday Asian car manufacturers now command half the American market. While the price of oil has dropped 10%, it is still well above $100 a barrel. Amusingly, American car showrooms no longer write how much a car costs per month on the windscreen, but how many miles per gallon it does. Barring any supply shocks, which are out of our hands, I hope that changing trends for smaller cars in America and the reduction on energy subsidies in Asia stops oil going to $200 a barrel in the short term.

Sunday My mum would not be proud of me. When a colleague asks me when the Olympics are starting, I reply “in August”. It has only just dawned on me this morning that the games will begin at eight minutes past eight on the evening of the eighth day of the eighth month of the year 2008. For those who have not seen the HSBC number plate advert on television, eight is a lucky number for Chinese as the word has a similar pronunciation to wealth. Superstition aside, let us keep our fingers crossed that the games will be a success as we need some good news this year.

Fen Sung is the manager of the Premier China Enterprise fund. His diary runs from July 28 to August 3.