City Focus: China's great leap forward
Standing in a vast white hall on Shanghai's Bund, Anthony Bolton admits with a wry smile that he sometimes felt 'a bit mad' to have taken on a new career as a stock-picker in China.
If producing consistent returns for 28 years as the head of the Fidelity Special Situations fund was a tough act, imagine trying to replicate that success in some of the most volatile and irrational markets in the world.
Bolton said: 'A guy took me aside recently and asked, "Why are you doing this? There's only downside. If you succeed everyone will say they expected it and if you fail you will ruin your reputation."'
Fortunately, Bolton says he has no fears about losing his reputation. Instead he is being driven by an instinct that China is too good an opportunity to pass up.
Outside the granite buildings that line the famous Huangpu river waterway is a reminder of what drew Bolton to China.
A giant bronze bull, a replica of Wall Street's statue, cast by the same artist only at twice the size, is a potent symbol of China's determination to transform itself into the most important market in the world.
Unlike its Wall Street cousin, however, Shanghai's bull has had to be cordoned off and guarded against crowds of people eager to rub its testicles for good luck.
Bolton said: 'If I'm right about China, what has been happening will reverse. The bears will be wrong and emerging markets money that has been flowing away from China will flow back in.'
China's booming economy means Beijing is now on every investment banker's speed dial - along with Russian oligarchs and Middle Eastern sheiks - when Western trophy assets come up for grabs.
Only yesterday, the country's main sovereign wealth fund was forced to deny reports that the Chinese state is set to buy Liverpool Football Club.
Bolton is more interested in the opportunities inside China, and he even remains bullish about the prospects for the Shanghai exchange.
So far this year, it has been the worst performing market in the world, falling 25% as the Chinese government tightened its monetary policy and put the brakes on the runaway economy.
'When is the turnaround going to come? Later this year the Chinese government, which was first to start tightening its policy, may begin to loosen it if it thinks inflation has peaked.
That could be the catalyst for the recovery of the Ashare market (Shanghai-listed Chinese companies),' he said.
His confidence is not shared by everyone. Bolton admits that the new Fidelity China Special Situations investment trust did not hit the top end of his expectations for fund-raising.
It managed £470m at its launch in April, lower than the £630m hoped for, although Bolton points out that it remains one of the UK's most successful fund listings for 20 years.
Bolton is frank in admitting that he lacks the detailed knowledge of the rest of Fidelity's China team, but he adds that he brings a knowledge of experience about how to pick good companies.
Since arriving in Hong Kong last December, he says he has made 150 company meetings, averaging 20 a month.
He is looking for businesses in China that are similar to ones that have been successful in the West. He says that he prefers to shy away from China's hulking state-owned enterprises.
'I have a natural bias towards private companies - the majority of my investments are small and medium-sized companies.
'On a risk and reward basis SOEs (stateowned enterprises) are less risky but less rewarding. It's the smaller companies that tend to blow up but we're looking at strong growth and lower valuations than in the UK,' he said.
If Bolton is alert to some of the pitfalls of doing business in China he has not let it faze him.
In 2004, the Chinese Communist Party suddenly chose to re-shuffle the senior executives at its top three state-owned telecoms companies - China Mobile, China Unicom and China Telecom.
None of the boards were consulted over the move, illustrating the Chinese government's occasional disdain for corporate governance.
Bolton, who has a large holding of both China Unicom and China Mobile (the world's largest telecoms company), says he is unconcerned by this kind of political risk.
He adds wryly: 'You know in France there are former stateowned companies where the government has control over the chief executive and that didn't used to stop me investing in French companies.'
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