Since the last update , CXSE encountered a major risk on event when CCP decided to continue their regulatory exercise by introducing sweeping measures, including barring curriculum-based tutoring institutions from raising money through stock market listings, in a bid to correct disorderly competition in the industry and ease the burden on Chinese students and their families. 

Foreign capital is also not allowed to control or participate in the private education sector through methods such as mergers and acquisitions, entrusted operations, or franchise chains, said the document issued by the General Office of the Communist Party of China (CPC) Central Committee and the General Office of the State Council, the cabinet, on Saturday.

The stock market encountered a knee jerk reaction and investors engaged in a bout of panic selling.

This caused CXSE to plummet from its previous price level of 60 to a low of 56.65 during pre market. 56.65 is near the strong support level at its Monthly 20 EMA which is exactly at the Fibonacci level of 50%. There is real risk that the stock may decline between 17 to another 35% over the mid to long term period ( 2 to 5 years )

In view of the latest development , it seems to me that China’s priorities are only on her citizen’s well being and the economy is secondary. I have concerns that this regulatory exercise will be a mid to long term event for China. More importantly, the regulatory events have started to interfere and changed the business fundamentals of its private institutions – as seen by what had happened to the private tutoring institutions. This is the true reason why investors decided to dump china shares. For the above two reasons, i have sold off all my CXSE shares. In return, i also sold off my Microsoft shares to cover the realized loss. As a result, my portfolio suffered minimal losses as the gains from my Microsoft shares were able to cover the losses from my CXSE shares. Will update my portfolio performance at the end of July.

I will stay on the sidelines and monitor this ETF in view of the current climate until China has officially declared the regulatory exercise as complete