Fidelity's Anthony Bolton reveals first Chinese investments
Rob Langston, 15 July 2010
Investment guru Anthony Bolton has revealed his first holdings in the Fidelity China Special Situations Investment Trust.
The manager said he had positioned the portfolio to benefit from structural changes in China, with key sectors including consumer retailers and stocks likely to benefit from consumer spending.
In the first statement from the £460m investment trust, the manager revealed that his two largest holdings were in China Mobile and Industrial & Commercial Bank of China.
Bolton said he had also taken significant exposure to financial stocks and several pharmaceuticals stocks.
The manager has also taken positions in China Merchants Bank, Tencent Holdings, China Unicom (Hong Kong), HSBC Holdings, Ping An Insurance, CNinsure, Hang Lung Properties and United Laboratories.
He said, ‘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, ‘Combined with the fact that Chinese authorities like to create “champions”, this will provide positive opportunities for investors over the longer term but corporate governance and policy risk are still a concern within some companies.’
The manager also warned of the risks posed by potential government tightening measures and large public debt at local government level.
However, Bolton said there were a number of opportunities for investors willing to invest in China, particularly in the Chinese domestic ‘A’ share market where international flows have been weak and domestic managers have held cash over the past 12 months.
He said the Chinese government did not have to cut spending or raise taxes as their western counterparts, and could loosen policy, spurring a more favourable macro environement.
Bolton said, ‘Recent macro indicators point towards slowing growth globally as the sharp economic recovery seen after the recession is losing momentum.
‘In China, the tightening process that started late last year is also slowing the economy although growth is still well above that being seen in developed markets.
‘In a low growth environment the high relative growth being experienced in China is increasingly attractive to global investors.’
The trust is primarily invested in Chinese stocks listed in Hong Kong and the US with some exposure to ‘A’ shares and Chinese stocks listed elsewhere.
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