Anthony Bolton – My Thoughts on China and Global Stockmarkets
- Chinese growth could return to 7-8 per cent but this is still appealing in a low growth world
- Investors to benefit from China’s shift from exports and low-value manufacturing to consumption and services
- China remains under-researched, providing more opportunities than developed markets
- Phase II of a multi-year bull market has started with economic double dip unlikely
- Hong Kong is the place to watch - it’s the epicentre where the developed world and China meet
Hong Kong, 22 November 2010 - China remains one of the most exciting investment opportunities in the world today and I believe we continue to be in a multi-year bull market, said Mr Anthony Bolton, President of Investments for Fidelity Investment Managers.
Mr Bolton, one of the UK’s most renowned portfolio managers, relocated to Hong Kong in April 2010 to manage a fund for UK based investors that invests in China and China related opportunities. He presented at the Foreign Correspondents Club in Hong Kong today to share his views on China and global stockmarkets.
“After a number of trips to the mainland and over 250 company meetings, I am as convinced as ever about the long-term potential of China. This will become the dominant economy in Asia and it will have an effect on every other country in the region - many of which will become satellites to China's sun,” said Mr Bolton.
“Firstly, I believe that in a low-growth world the higher growth in emerging markets like China would become even more attractive. Second, the driver of economic growth in China is shifting from exports and low value manufacturing to consumption, higher value manufacturing and services. And third, the market is less well researched, often throwing up better investment opportunities than in the developed markets,” he explained.
Mr Bolton said an additional important factor supporting the outlook for emerging markets is the difference between the monetary policies of the developed and emerging worlds.
“I have never before witnessed the current situation whereby money created in one country is leaking at a rapid pace into assets in another part of the world. This is a phenomenon that I think is only in its early stages and could be the big investment story of the next year. The developed world is printing money and this liquidity is driving emerging markets. As a result, growth stocks and growth markets should do well in the next stage of the bull market.
“The place where these two "tectonic plates" - the slow developed world and the fast emerging one - rub up against each other is Hong Kong. Hong Kong's monetary policy is tied to the US while its trade is principally with the rest of mainland China. It remains unclear whether Hong Kong's current monetary policy can continue indefinitely and if it changes what the financial consequences will be - but they could be very significant. Hong Kong will be an interesting market to watch.”
Commenting on the year ahead, Mr Bolton said: “I believe a double dip is unlikely and we are at the start of the second phase of a multi-year bull market.”
With respect to specific sectors in China, Mr Bolton said he likes consumer discretionary businesses such as retailers,automobiles, lifestyle goods producers, restaurants, hotels. He also likes the services sector such as telecommunications, internet companies, automation, healthcare and financial stocks but is less convinced about manufacturers, infrastructure and commodity plays such as oil.
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ABOUT FIDELITY INVESTMENT MANAGERS
Fidelity Investment Managers is an affiliate but separate company to Fidelity Investments and provides investment products and services to individuals and institutional investors outside of the Americas. Fidelity has been in Asia for 40 years with offices in Japan, Korea, Australia, Hong Kong, Taiwan, Singapore and China. Fidelity manages US$231.6billion Assets Under Management (as at 30 September 2010), has over 6 million customer holdings and manages 756 funds. Fidelity has one of the largest proprietary research teams in the world, providing insights into around 98% of the world's stock markets (as measured by the Morgan Stanley Capital International World Index, 4 June 2010).