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Fidelity’s Bolton expects China stimulus as inflation falls

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Anthony Bolton has said he expects to see more positive news emerging from China later this year after a fall in inflation left the authorities with more flexibility to boost growth.

Bolton (pictured), speaking at the £510m Fidelity China Special Situations trust’s AGM yesterday, told investors he still believes his focus on consumption and the expanding middle class in China is the right approach to investing in the region, according to a report in the Telegraph.

The legendary fund manager said inflation is now less of a worry in China as it has fallen as the global economy has slowed, leaving the country’s authorities in a position to stimulate growth.

“Valuations and sentiments are very supportive for Chinese equities,” he reportedly said. “With inflation less of a concern, China can continue to stimulate the economy.”

Over the long term Bolton added he still expects a large amount of money to flow from the developed, to the developing economies, in particular China.

Those who have remained invested in the trust have had a torrid time since launch, and in the last year – amid sharp declines in equity markets – the portfolio saw its net asset value (NAV) fall 18.5% (to 31 March 2012).

In June, Bolton said his use of gearing had exacerbated the falls in NAV and the trust’s share price over the last 12 months, while he also has a focus on medium and smaller-sized companies which are more volatile.

If markets do turn in his favour, his play should ensure he sees more upside than those invested in the larger-cap stocks, while gearing could also provide an extra kicker if equities rise.


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