Chinese recovery is already under way, says Bolton
The famed fund manager remains bullish.
Fund manager Anthony Bolton believes he'll be proved right on his Chinese bet.
The legendary small company investment specialist came out of retirement two years ago to launch a China Special Situations fund. But returns have been disappointing so far for the army of investors who backed him.
But Mr Bolton flew over from his Hong Kong home this week for an exclusive interview with The Independent where he offered good news for concerned investors in his fund.
"My personal view is that we're already in a recovery in China," he said.
Mr Bolton achieved consistent growth of 20 per cent a year for 28 years while managing the Fidelity Special Situations fund. But returns on the new trust have been poor. It lost 34 per cent of its value last year and was fifth out of six investment trusts in its sector.
"But something quite important changed in November," he said. "For most of the time I've been out there, the monetary authorities have been tightening monetary policy. But in November they cut what is known as the reserve rate requirement for banks, and then cut it again last weekend."
He said the move was important because periods of easing are good for stock markets. "It creates a much more favourable background for stock markets," he said. "Inflation has also fallen quite a bit, to 4.5 per cent from 6 per cent, which helps."
But he also said the improving global economic position would help. "I'm generally optimistic about world stock markets, and China is part of that. What's important in my business is not what the outlook is like, but what is discounted in prices. There are challenges out there, but I think that has already been reflected in prices."
Mr Bolton pointed out that China stock valuations are now at near 10-year lows. "Long-term valuations are very useful and you want to be bullish when they're low," he said.
He invests in small to medium-sized businesses and has around 120 in his portfolio. While such stocks can be riskier than large corporates, he thinks the potential rewards are worth it. Mr Bolton believes the recovery in Chinese stocks is already reflected in large cap companies, but has yet to hit the smaller ones in which he's invested.
If he's right, and his fund starts to outperform the rest of the index, his decision to come out of retirement will be vindicated. But that is the short-term. Investors remain worried about what will happen to the Fidelity China Special Situations next year.
Rumours remain that Mr Bolton will return from Hong Kong after April 2013, the date until which he initially agreed to manage the fund. Will he retire then? "I can't answer that yet," he said.
"All I can say is that I'll be there until at least April 2013 and before our AGM in July I will say whether or not I'm stopping or going on. I'm considering different factors."
Mr Bolton's full interview will be published in The Independent next week
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
How couples can protect their financial interests when cohabiting
Four million signed up for company pension scheme following government’s auto-enrolment
Money alert: Overdrafts at HSBC and First Direct
How to protect your assets if the stock markets begin to head south again
Buyers beware of new-build home headaches
- 1 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 2 Jeremy Clarkson 'sees no problem' with his racist language on Top Gear, says BBC
- 4 London restaurant 34 creates champagne glass modelled on Kate Moss’ left breast
- 5 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£550 - £650 per day: Orgtel: Business Analyst - Traded Credit Risk - Investmen...
£55000 per annum: Harrington Starr: A financial software vendor at the forefro...
£600 per day: Harrington Starr: .NET Developer C#, WPF,BLL, MSMQ, SQL, GIT, SQ...
£65000 per annum: Harrington Starr: A financial software vendor at the forefro...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony