FT Alphaville could not let the day pass without commenting on the news that Anthony Bolton is deferring his retirement and returning to running money.
And the reason for the comeback? The Fidelity man is very excited by the investment opportunities available in China. In fact, he believes it’s the investment opportunity of the next decade.
From the FT on Thursday afternoon (emphasis ours):
I recently spent three months based in Fidelity’s Hong Kong office and this rekindled my interest in the region and China in particular. After a few weeks there, I said to my wife that the exciting opportunities available in China, and my belief that the market could go a lot higher over the next few years, made me wish I was still managing money. Rather to my surprise, she said that as I only had one life I should consider running a fund again while I still had the opportunity. I spent the next few weeks discussing the idea with my family and senior colleagues before deciding to give it a go.
No-one should imagine the ride will be smooth. China is an emerging market and the volatility of its stock markets will remain higher than in developed markets.
Although it would have been wonderful to have started a new fund at the beginning of this year, when all stock markets were in the “bargain” category, I believe China is still fairly valued today, rather than expensive. We are only one year into the new Chinese bull market and I think it has the potential to go on for several more years.
Next year, I expect most world markets to consolidate. China will not be immune but this year it has already experienced a longer retrenchment than many other markets. Could a bubble form in Chinese equities? I do not know, but many of the conditions necessary are there and a number of strategists are predicting one.
An experienced Asian observer has said: “As everyone knows, a bubble is a market that rises rapidly in which one is not invested; if one is invested, then it is a bull market.” I have sympathy with this view and I believe that, like bull markets, bubbles normally continue for several years.
Okay, Mr Bolton…
The situation in China today is very similar to that in Taiwan or South Korea during their fast growth phases 20 or so years ago and in Japan before that. However, growth is occurring on an even bigger scale because of the enormous size of the Chinese population. Just as consumers in the west start to rebuild their savings rates, consumers in China are likely to start to run down their very high savings.
Many areas of the economy are in the steepest part of their development curve as consumer incomes reach a level where increasing numbers of people can aspire to own homes, cars and household goods. Because of the scale of what is happening and the effectiveness of a centrally-run economy that other emerging markets do not enjoy, the world may never see anything like this again.
We hear you.
Obviously, there’s no need to mention the performance of the Shanghai market overnight.
Related link:
Anthony “The Bull” Bolton – FT Alphaville