By Hanny Wan Nov. 26 (Bloomberg) — Fidelity International’s Anthony Bolton said China’s “attractive” economic growth lured him to move to Hong Kong to set up a fund focusing on the country as recovery in the U.S. and Europe “runs out of steam.” Bolton will relocate from London in the first quarter of next year and return to managing money after stepping down from day-to-day portfolio management in 2007. “The center of gravity is shifting to this part of the world,” Bolton, 59, president of investments at Fidelity International, which manages $210.1 billion of global assets, said at a media briefing in Hong Kong today. “I want to play a bit of a part in it while I still get the chance to do it.” Goldman Sachs Group Inc. has predicted China’s gross domestic product may surpass the U.S. by 2027. Bolton, who began investing in China in 2005, forecast the country would overtake Japan as the world’s second-largest market “if not this year, almost certainly next year.” “There were very few things that would persuade me to come back to money management, but China is the only thing,” Bolton said. “That’s why I’ve decided to give up sitting on the beach. This is why I’ve decided to delay my retirement.” He favors shares related to China’s domestic economy , and may invest in Chinese stocks listed in Hong Kong, Shanghai, and New York, declining to be more specific about his new fund. ‘Bargain Stage Over’ China has cut interest rates five times since September 2008 and encouraged $1.3 trillion of lending to boost domestic spending as the global recession curbed demand for the country’s exports. Hong Kong’s Hang Seng China Enterprises Index has surged 67 percent this year on the credit expansion, driving its price to 16.8 times estimated earnings, up from 10.2 times at the start of the year. The mainland’s Shanghai Composite Index has rallied 74 percent in the same time. “It would have been lovely if we could have launched this fund at the beginning of this year,” Bolton said. “The bargain stage is over. But I don’t think valuations are yet in the expensive phase where one should be more shy or more cautious.” Bolton said China, whose economy grew by 8.9 percent from a year earlier in the third quarter, is “much too early for a bubble,” countering comments by China’s central bank adviser Fan Gang , who on Nov. 18 said the nation is among the emerging markets facing risks of property and commodity-market bubbles. Economic recovery in the U.S. and Europe will “run out of steam” in the first half of 2010, Bolton said. China, with the world’s largest foreign-exchange reserves of $2.3 trillion, is the U.S.’s biggest creditor, holding $798.9 billion of Treasuries as of September. ‘Mortgaging the Future’ “The economies of the western world, particularly America, the U.K., and Europe, are going to see lower growth than they saw before the financial crisis because of the cost of solving the financial crisis,” Bolton said. “They have, to a certain extent, mortgaged the future, so there’ll be a cost that they will have to over time increase taxes or reduce spending to put their own balance sheets back in order.” Bolton’s China fund will be the fourth in Fidelity’s portfolio focused on the country, according to presentation materials distributed at the media briefing. The others are: Fidelity Funds China Focus Fund with $4.08 billion, managed by Martha Wang ; and, Fidelity Funds Greater China Fund at $366 million, managed by Wilson Wong , who also oversees another China opportunities portfolio launched this month. The China Focus Fund has added 65 percent this year through Nov. 20, compared with a 61 percent gain in its benchmark MSCI China Index, according to Bloomberg data. The UBS SDIC Ruifu Classification Securities Funds – Ruifu Plus Fund , with a total return of 141 percent for the year so far, is the best performing fund investing in mainland-listed China shares this year, according to Bloomberg data. Bolton, born in 1950, joined Fidelity International in 1979, managing the Special Situations Fund until 2007, which generated an annualized return of 19.5 percent, according to company statements released today at the media briefing. To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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Anthony Bolton Starts China Fund for Fidelity as West `Runs Out of Steam’
