What is wrong with eFuture?

We’re back to where we were when we advised you to buy. This is a little disappointing. In a week, earnings will be out and we have little doubt that these will be good, although we’re in the more quiet part of the year for them. 

So, what’s behind the fall in the shareprice from 18 to 14? There is absolutely no negative news out in any way, so try Chinese shares in general. Here’s a chart of the Shanhai index:

No, that doesn’t look pretty. We’re below where we were in the third week of April, and that in itself marked a 50% fall from the high half a year earlier! The Chinese market seems oversold, but if you look at what happened between the second week of March and the third week of April, this situation can last for quite some time, and the market can fall further. Alas.

Compare that with EFUT’s chart over the same period:

The fall in EFUT was in just five trading days. The correlation with the Chinese market is far from perfect, for instance, the big fall in Chinese shares earlier this year wasn’t reflected in EFUT, which went up in that same period, mostly. This was because positive news drove EFUT higher over that period. Now, it’s just a little quiet.

We also broken the resistance levels at $15.5. But we are hopeful that there will be a turnaround in EFUT shares shortly, some speculators will return to this before quarterly figures are out next week.

It’s also instructive to see what happened to the Chinese markets over the last two years. How things can change!

Hard to pick a bottom here, but considering how the Chinese economy keeps marching on, this will turn around, probably somewhere before the Olympic games.

If you’re not in EFUT, this week offers a good opportunity. You can read our previous blog entries for the reasons we’re optimistic about this company. It’s a long-term buy and hold, in our view.