Until COVID Ends, Protect Principal—Don’t Blindly Add Positions

Cycle

20200203-20200209

Market

Market	Index	1 week ago (%)	2 weeks ago (%)
SSE	3075.50	-0.54	0.28
SZSE	10954.39	0.69	2.1
ChiNext	1932.51	1.49	3.71
Hang Seng	29056.42	1.46	0.66
H-Share	11419.91	1.35	0.12
Red Chip	4596.31	1.52	-0.39
Dow Jones	29348.10	1.82	0.66
Nasdaq	9388.94	2.29	1.75
S&P 500	3329.62	1.97	0.94

Review

In the pre-holiday note “Don’t Blindly Trust Fund Managers,” we said “barring extreme black swans before the holiday, the market should keep rising; even small dips aren’t serious, don’t cut positions blindly.” We also stressed “it’s your money; markets have risk; be cautious. Don’t be overconfident, don’t overtrust managers.” We had risk awareness but didn’t act on it, so in the last three sessions before the outbreak we stayed blindly optimistic.

Event

Only when Wuhan locked down on Jan 23 did we take COVID seriously. But with the holiday, A-shares were shut; we couldn’t reduce. On Feb 3, all three major A-share indexes gapped down over 8%. Except for medical protection/vaccine names, almost everything plunged.

This outbreak is taken very seriously from the top down; personal protection awareness is high. It should pass soon. We shouldn’t panic, nor be overly optimistic. Watch the outbreak. A deep squat in the short term doesn’t change a medium/long bull trend. Existing stocks/funds shouldn’t be blindly cut. Light positions can add a bit to biotech/oversold tech.

Rationale for rebalancing

Biotech related to the outbreak may be among the few resilient plays. 1) Medical devices, protection, and vaccines are livelihood essentials; even in severe outbreaks they don’t halt. 2) Biotech is the front line—sales may rise. When buying, prefer non-epicenter firms: simple logic—products from the epicenter struggle to ship out, while products from elsewhere can enter. For infrared thermometers, Hangzhou’s Dali Tech is more investable than Wuhan’s Guide Infrared.

Consensus pre-holiday still favors hard tech/China core assets. They have room. You can buy favored tech stocks.

Positions

Type	Code	Name	This period
Stock	SZ002460	Ganfeng Lithium	Flat
Stock	HK01772	Ganfeng Lithium	Flat
Fund	F001790	Guotai Smart Auto	Flat
Fund	F000404	E Fund Emerging Growth	Flat
Fund	F005911	GF Dual Engine Upgrade	Flat
Fund	F519778	BOCOM Data Economy	Flat
Fund	F110026	E Fund ChiNext ETF Lk A	Flat
CB	SZ123041	Eastmoney CB	Flat

Notes

Stay vigilant. The outbreak is basically contained now, but when firms and schools reopen and people move, it could worsen—stay alert. Until the outbreak is fully over, the priority is to protect principal—don’t blindly add positions.

During the outbreak, work from home, keep a regular schedule, exercise more, and keep a good mood.

Published at: Feb 3, 2020 · Modified at: Jan 14, 2026