Asian-Pacific Funds Slide

Kevin Baker

There's an ancient Chinese proverb: When a Shanghai taxi driver gives a stock tip, the market has topped.

In 2006, the average Asia-Pacific fund we track roared ahead by 23.5%. But the stock mania came to a screeching halt in Shanghai, China, on Tuesday, trimming 8.8% off the Shanghai Stock Exchange Composite index. This set off a series of stock market fender benders around the globe.

Tuesday's damage also wiped out much of the year-to-date gains for Asian-Pacific funds. (See chart below.)

This may turn out to be a healthy correction to frothy global markets needing to readjust to slower predicted U.S. economic growth rates.

Or, if Mr. "Irrational Exuberance," former Fed Chairman Alan Greenspan, is correct and we are headed for a U.S. recession later this year, Tuesday may be cited as the first day of a new bear market.

The fund that took the worst hit was the Asia Tigers Fund (GRR Quote). It has a 24.9% concentration in South Korean stocks with that country's Kospi index losing 1.05% Tuesday and another 2.56% on Wednesday.

The fund's 17.7% allocation of Hong Kong stocks didn't help, either; the Hang Seng index lost 1.76% Tuesday and 2.46% Wednesday.

The best advice ever given was from Douglas Adams in his book Hitchhiker's Guide to the Galaxy, when he wrote, "Don't panic."

Shanghai stabilized on Wednesday. And the U.S. markets have opened in an orderly manner, rather than extending yesterday's plunge.

What Goes Up Must Come Down Asia-Pacific funds traded in the U.S.
Ticker	Fund	Fund Type	1 Day Return	YTD Return	2006 Return
GRR	Asia Tigers Fund	Closed-end	-9.95%	-7.36%	41.09%
FEAAX	Fidelity Advisor Emerging Asia Fund	Open-end	-4.55%	-1.21%	38.93%
APF	Morgan Stanley Asia-Pacific Fund	Closed-end	-4.59%	-3.19%	24.62%
ADRA	BLDRS Asia 50 ADR Index Fund	ETF	-4.25%	-0.36%	22.52%
PAPRX	Pioneer AmPac Growth Fund	Open-end	-3.32%	0.63%	11.35%
MATFX	Matthews Asian Technology Fund	Open-end	-3.84%	-2.02%	21.29%
MPACX	Matthews Asia-Pacific Fund	Open-end	-3.33%	-0.47%	17.39%
MAPCX	BlackRock Pacific Fund	Open-end	-2.37%	2.31%	19.06%
USPAX	Excelsior Pacific/Asia Fund	Open-end	-3.32%	1.30%	10.32%
ICARX	ICON Asia-Pacific Region Fund	Open-end	-3.01%	2.06%	9.02%
IASMX	Guinness Atkinson Asia Fucus Fund	Open-end	-0.81%	3.80%	36.15%
FAX	Aberdeen Asia-Pacific Income Fund	Closed-end	-0.47%	2.74%	14.88%
DFRSX	DFA Pacific Rim Small Company Portfolio	Open-end	-1.25%	8.47%	39.32%
Source: Bloomberg

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