Bolton bets on a boom in Chinese domestic demand

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The Independent Online

Fidelity's renowned investment guru, Anthony Bolton, said yesterday that he was backing Chinese domestic demand as the company revealed details of its star fund manager's strategy for his new Chinese fund.

Mr Bolton, who relocated to Hong Kong in March to manage the Fidelity China Special Situations Fund, said he had positioned his portfolio to "benefit from the structural changes I believe are taking place in China".

He added: "The key sectors the portfolio is exposed to include a number of retailers such as department stores and sports goods retailers, electrical goods, shoes and jewellery producers and other areas driven by consumer spending such as wine and spirits, restaurants, hotels, automobiles, telecom and internet."

These show Mr Bolton is betting on an upsurge in Chinese domestic demand as the economy of the biggest tiger in Asia continues to roar, despite yesterday's signs of cooling.

However, Mr Bolton also said he had significant exposure to financial stocks that include banking, insurance, brokers and real estate agents as well as several pharmaceutical companies. His portfolio is primarily invested in Chinese stocks listed in Hong Kong and the US but he still has some exposure to Chinese-listed "A" shares as well as Chinese stocks listed elsewhere in the world.

Mr Bolton was due to retire to the Caribbean last year but relocated to Hong Kong to create the new fund because of what he saw as unrivalled opportunities offered by China's booming economy. In Britain he was dubbed the "quiet assassin" because of the power he wielded in boardrooms, particularly dysfunctional ones, with corporate governance issues. He was influential in preventing the Carlton Communications boss, Michael Green, from becoming chairman of the merged ITV.

He gave an upbeat assessment of Chinese businesses, saying: "Many of the companies I have met have tended to be those that have been relatively under-researched, especially in the medium- and smaller-sized sector.

"Generally, balance sheets are much stronger than I expected, with many companies often having net cash positions," he added. He cited corporate governance and "policy risk" as the region's main potential drawbacks.